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THE    LABOUR   MOVEMENT 


THE 

LABOUR  MOVEMENT 


BY 

L.    T.    HOBHOUSE 


THIRD   EDITION,    COMPLETELY   REVISED 


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(i4//  n^/z/s  reserved) 


PREFACE   TO   THIRD   EDITION 

Written  nearly  twenty  years  ago,  this  little  volume 
was  intended  as  a  brief  and  elementary  analysis 
of  the  principles  underlying  the  Labour  Move- 
ment of  that  time.  Though  several  times  reprinted 
it  has  never  been  fully  revised,  and  now  that  the 
task  has  been  undertaken  it  has  been  found  neces- 
sary in  large  measure  to  rewrite  the  book.  At 
the  same  time  I  have  kept  as  closely  as  possible 
to  the  original  form  and  scope  of  the  work,  which 
was  intended  to  be  an  outline  sketch,  not  at  any 
point  an  exhaustive  treatment.  I  have  felt  justi- 
fied in  so  doing  because  after  twenty  years  the 
social  theory  outlined  appears  to  me,  even  more 
clearly  than  before,  to  express  the  real  mind  of 
the  Labour  Movement  and  the  possible  lines  of 
social  regeneration  better  than  the  more  familiar 
forms  of  Socialistic  theory.  Indeed,  the  present 
Syndicalist  Movement,  wild  in  many  of  its  ex- 
pressions and  incoherent  as  a  substantive  plan  as 
it  may  be,  becomes  intelligible  as  a  protest  of 
despair  against  bureaucratic  Socialism  and  the 
cumbersome  slowness  of  the  Parliamentary 
machine.     The  need  of  the  day  is  still  as  it  was 


6  PREFACE  TO   THIRD   EDITION 

twenty  years  ago  to  appreciate  the  right  relations 
between  **  voluntary  "  associations  like  Trade 
Unions  and  the  collective  action  of  the  State,  to 
decide  on  the  true  function  of  each,  and  to  dis- 
tinguish what  they  can  and  cannot  do  to  bring 
about  more  human,  more  equitable,  and  more  har- 
monious relations  in  the  economic  world.  As  I 
write  the  greatest  strike  of  our  industrial  history 
is  ending.  Deeply  impressive  as  an  example  of 
democratic  organisation,  the  lesson  of  the  struggle 
is  that  even  under  favourable  circumstances  the 
power  of  combination  is  narrowly  limited  except 
so  far  as  it  carries  with  it  an  effective  force  of 
public  sympathy.  The  history  of  the  crisis  gives 
no  substance  to  the  vague  alarm  lest  Society  be 
some  day  arbitrarily  "  held  up  "  by  a  corribination 
of  workpeople  controlling  some  vital  instrument 
of  production.  That  is  a  bare  possibility  against 
which  the  State  may  fairly  take  its  precautions, 
but  it  has  little  substance  in  comparison  with  the 
urgent  and  ever-present  reality  that  even  with  the 
best  organisation  labour  has  the  utmost  difficulty 
in  securing  a  reasonable  standard  of  living.  The 
comparison  of  men  demanding  a  very  moderate 
wage  in  return  for  very  arduous  work  to  robber 
barons  preying  on  Society  is  a  bitter  satire,  not 
on  Trade  Unionism  but  on  an  attitude  of  mind  too 
common  among  the  more  fortunate  classes. 

A  more  democratic  State  than  ours  might  con- 
ceivably dispense  w'ith  Trade  Unionism  and  settle 
industrial  disputes  by  compulsory  arbitration.   With 


PREFACE  TO  THIRD   EDITION  7 

us  I  am  afraid  that  the  beautiful  doctrine  of  indus- 
trial peace  does  not  always  mean  peace  with  social 
honour.  It  is  too  much  like  a  soothing  formula 
crooned  over  harsh  and  inequitable  conditions 
against  which  it  is  right  to  war.  The  acute  tem- 
porary misery  of  a  strike  impresses  the  imagination, 
but  the  long-drawn-out  wretchedness  of  j)erma- 
nent  and  hopeless  poverty  is  accepted  as  a  part  of 
the  natural  order.  The  method  of  the  strike  alone 
will  not  work  a  cure,  but  it  at  least  puts  an  edge 
upon  the  social  conscience,  and  cuts  into  the  com- 
fortable acquiescence  in  those  conditions  which 
cause  massive  misery  and  tend  to  social  decay. 

In  revising  this  book  I  have  been  stimulated  and 
aided  by  Mr.  J.  A.  Hobson,  who  has  kindly  read 
the  MS.  and  made  many  useful  criticisms.  The 
general  view  of  the  problem  coincides  more  closely 
with  his  economic  analysis  than  with  any  other, 
and,  in  fact,  in  its  new  form  owes  much  to  the 
work   of   this   most    original    and   independent    of 

our  econornists. 

L.  T.   HOBHOUSE. 

HiGHGATE, 

Aprils  191 2. 


CONTENTS 


CHAPTER  I 

PAGE 

LABOUR   AND  WEALTH     .  .  .  .  .  .II 


CHAPTER   II 
TRADE  UNIONS  AND  THE  CONDITIONS  OF  LABOUR    .  .      20 


CHAPTER  III 
CO-OPERATION  AND  THE  CONTROL  OF  PRODUCTION.  .      59 

CHAPTER   IV 
THE  DISTRIBUTION  OF  WEALTH  .  .  .  .94 


CHAPTER  V 

THE  CONTROL    OF    INDUSTRY    AND    THE    LIBERTY    OF    THE 

INDIVIDUAL   .  .  .  .  .  .127 

9 


THE    LABOUR   MOVEMENT 

CHAPTER    I 

LABOUR   AND   WEALTH 

The  movement  which  originally  suggested  this 
volume  took  definite  shape  in  1888-9.  Primarily 
an  attempt  to  extend  the  benefits  of  Trade  Union- 
ism to  the  unskilled  worker,  it  achieved  some  not- 
able successes  in  its  own  sphere.  But  its  wider 
and  more  permanent  influence  is  to  be  seen  in 
the  change  of  attitude  which  it  effected  in  the  world 
of  organised  Labour  as  a  whole.  The  "  New 
Unionism  "  as  a  distinct  movement  died  away  in 
the  early  Nineties,  and  during  the  last  years  of 
the  century  the  public  mind  was  turned  to  other 
thoughts  than  those  of  social  reform.  A  period 
of  reaction  set  in  and  the  democratic  spirit  slum- 
bered and  slept.  But  meanwhile  the  elements  of 
a  newer,  a  wider,  and  a  more  considered  Labour 
policy  had  been  formed.  Not  only  had  the  Inde- 
pendent Labour  Party  arisen  out  of  the  New 
Unionism,  but  in  the  ranks  of  Trade  Unionism  in 
general  the  prejudice  against  what  was  called 
"  State  Interference  "  had  largely  broken  down, 
and  the  idea  of  using  the  machine  of  Government 
to  further  the  interests  of  Labour  had  become 
familiar  on  all  hands.  Meanwhile  Trade  Union- 
ism itself  was  seriously  threatened.      The  failure 

u 


12  THE   LABOUR  MOVEMENT 

of  the  Amalgamated  Engineers  in  1897  revealed 
elements  of  weakness,  or  perhaps  we  should  say 
rather  that  the  success  of  the  Federated  Engineer- 
ing Employers  gave  evidence  of  a  new  force  on 
the  other  side.  ,  There  followed  a  series  of  judicial 
decision?  which  undermined  the  whole  legal  posi- 
tion of  the  Trade  Union  as  it  had  been  understood 
since  1875,  ^^^  organised  labour  found  itself  com- 
pelled to  fight  for  its  existence  at  the  polls.  That 
which  no  Socialist  writer  or  platform  orator  could 
achieve  was  effected  by  the  judges.  They  called 
into  existence  the  Parliamentary  Labour  Party. 
Moreover,  they  caused  this  party,  in  spite  of  all 
differences,  personal  or  substantial,  to  work  on 
the  whole  in  alliance  with  Parliamentary  Liberal- 
ism, and  so  maintain  a  majority  for  a  far-reaching 
policy  of  social  reform.  Thus  the  course  of  events 
— that  ultimate  arbiter  of  all  book  controversies- 
has  decided  the  main  question  which  this  volume 
originally  set  out  to  discuss,  and  has  confirmed 
the  view  that  labour  organisation  needs  to  be 
supplemented  by  labour  politics.  Many  recent 
events  equally  emphasise  the  converse  truth  that 
labour  politics  must  work  hand  in  hand  with  labour 
organisation. 

The  efforts  of  the  working  class  to  maintain  and 
improve  its  standard  of  life  under  modern  indus- 
trial conditions  began  at  a  time  when  the  mass 
of  its  members  were  excluded  from  the  parlia- 
mentary franchise.  They  therefore  necessarily 
took  the  shape  of  "  voluntary  "  or  rather  extra- 
parliamentary  organisations.  Labour  built  up  for 
itself  the  Trade  Union  for  the  defence  of  the 
standard  wage,  the  Co-operative  Store  for  the 
supply  of  necessaries  at  a  reasonable  price,  and 
the  Friendly  Society  to  meet  the  contingencies  of 
life,  without  the  aid  and  to  some  extent  against 


LABOUR  AND   WEALTH  13 

the  will  of  Government.  When  the  extension  of 
the  franchise  placed  the  balance  of  political  power 
in  the  hands  of  the  masses  a  new  avenue  of  pro- 
gress was  opened  up.  It  became  possible  to  use 
political  machinery  to  achieve  results  which  hitherto 
had  been  outside  the  scope  of  any  but  a  volun- 
tary organisation.  But  it  was  inevitable  that  there 
should  at  first  be  doubt  and  hesitation  as  to  the 
new  method.  It  is  not  surprising  that  there  should 
have  been  a  time  when  Trade  Unionists  and  Co- 
operators  looked  on  one  another  with  suspicion, 
while  both  were  decried  by  the  partisans  of  State 
action  as  the  Whigs  of  the  Labour  Movement  who 
were  bent  on  framing  a  new  aristocracy  within  the 
working  class.  But  the  era  of  mutual  suspicion 
has  passed  away,  partly  because  each  of  the  move- 
ments in  question  is  emerging  from  its  primitive 
limitations  and  fulfilling  wider  and  higher  pur- 
poses, and  partly  because  along  with  this  growth 
comes  a  better  understanding  of  other  methods 
of  reform. 

The  truth  is,  as  I  hope  to  show,  that  Trade 
Unionism,  Co-operation,  and  State  and  Municipal 
Socialism  have  in  essentials  one  and  the  same  end 
to  serve.  Far  from  being  alternative  or  incom- 
patible methods,  each  is,  I  believe,  the  necessary 
supplement  to  the  others  in  the  fulfilment  of  the 
common  purpose,  and  my  present  object  is  to 
consider  what  this  purpose  is  and  how  each  will 
help  to  work  it  out. 

In  a  general  way  it  is  easy  enough  to  lay  down 
the  objects  of  any  genuine  movement  of  economic 
reform.  That  the  means  of  livelihood  should  be 
shared  by  all  members  of  society,  and  this  in  such 
a  way  that  all  should  have  a  chance,  not  merely  of 
living,  but  of  making  the  best  of  themselves  and 
their  lives — thus  much  must  be  the  desire  of  every 


14  THE  LABOUR  MOVEMENT 

one  who  considers  the  subject.  And  though  no 
economic  progress  can  of  itself  produce  good 
family  life,  nor  intellectual  culture,  nor  public 
spirit,  yet  that  all  of  these  may  flourish  certain 
economic  conditions  must  be  fulfilled,  and  the 
object  of  industrial  reform  is  to  bring  about  these 
conditions.  On  the  national  industry  the  whole 
of  the  national  life  is  based,  and  whatever  powers 
may  build  up  the  fair  edifice  of  the  common  weal, 
the  economic  system  is  responsible  for  the  sound- 
ness of  the  substructure.  This  soundness  may  be 
said  to  consist  in  the  provision  by  honest  methods 
of  the  material  requisites  for  a  good  and  full  life 
for  all  members  of  the  community.  Probably  all 
would  recognise  this  as  desirable,  though  some 
may  deny   its   possibility. 

With  this  denial  I  shall  deal  later.  Meanwhile 
I  would  point  out  that  controversy  really  begins 
when  we  attempt  to  lay  down  the  necessary  pre- 
requisites of  our  admitted  aim.  But  in  all  the 
movements  which  I  am  considering  it  would  be 
agreed  that,  if  the  economic  basis  of  social  life  is 
to  be  sound,  not  increased  production,  but  a  better 
distribution  of  wealth,  is  essential.  It  is  true  that 
wealth  is  not  an  end  in  itself.  It  is  true  that  be- 
yond a  certain  point  increase  of  wealth  does  not 
augment  happiness,  but  rather  tends  to  mar  it. 
It  is  true  that  the  acquisition  of  wealth,  as  such, 
is  a.  base  end  to  set  before  a  man,  or  a  class,  or 
a  nation.  It  is  true  that  you  will  never  satisfy 
your  "  infinite  shoeblack  "  by  filling  his  stomach. 
Unfortunately,  these  truths,  or  shall  we  say 
truisms,  are  oddly  applied.  They  are  apt  to  be 
most  vividly  realised  by  the  possessors  of  wealth' 
(who  are  certainly  in  a  position  to  judge  of  its 
vanity)  when  they  hear  the  poor  complaining  of 
their  lot.     But  this  effect  is  not  just  what  might 


LABOUR  AND   WEALTH  15 

be  anticipated.  Instead  of  prompting  the  wealthy 
to  eager  acceptance  of  measures  which  would 
disembarrass  them  of  those  gifts  of  fortune  which 
obstruct  their  higher  hfe,  it  serves  only  to  make 
them  draw  tighter  the  purse-strings  and  save  in 
subscriptions  what  they  are  paying  in  extra 
taxation.  Their  dread  of  wealth  appears  to  be 
wholly  altruistic.  It  is  an  anxiety  so  refined  that 
it  only  concerns  other  people,  and  torments  itself 
lest  men  should  be  "  spoon-fed  "  with  too  much 
of  the  goods  of  this  world  if  the  aid  of  the  State 
be  invoked  to  secure  them  a  minimum  wage, 
regular  employment,  and  five  shillings  a  week  at 
seventy.  Upon  the  whole  this  anxiety  seems  mis- 
placed. Great  wealth  is  useless  and  may  be  worse. 
But  in  relation  to  the  claims  of  labour  the  very 
term  "  wealth  "  conveys  misleading  suggestions. 
There  are  in  a  modern  society  two  classes.  There 
are  those  who  have  never  known  unsatisfied  hunger 
unless,  perchance,  they  have  missed  a  train  or 
found  a  refreshment -room  closed.  There  are  those 
who  from  day  to  day  are  uncertain  of  the  next 
meal,  and  with  these  may  be  ranked  in  their 
general  outlook  on  life  the  much  larger  mass  of 
those  who  live  so  near  the  margin  of  subsistence 
^s  to  be  permanently  aware  that  a  slight  turn  of 
fortune,  a  change  in  the  course  of  trade,  the  failure 
of  an  employer,  an  illness,  or  advancing  age  may 
reduce  them  to  the  same  predicament.  As  be- 
tween these  two  classes  there  is  the  gulf  of  a 
widely  different  experience.  For  the  one  wealth 
means  a  more  or  less  of  things  which,  after  all, 
man  may  make  shift  to  do  without.  For  the  other 
it  means  security  for  bare  wants.  No  one  who 
has  felt  these  wants  or  realised  in  imagination 
what  it  is  to  feel  them  will  listen  with  anything 
but   contempt   to   the   imputations   of   materialism 


16  THE  LABOUR  MOVEMENT 

and  class-selfishness  when  directed  against  the 
claims  of  labour  to  economic  security.  Exceptional 
men  can  take  poverty  as  a  bride.  For  the  mass 
a  material  sufficiency  is  necessary  to  a  healthy 
and  civilised  existence,  and  rest  from  manual  toil, 
especially  the  very  mechanical  labour  imposed  by 
machine  industry,  is  the  condition  of  the  full 
development  of  the  faculties.  Now  it  cannot  be 
denied  that  this  sufficiency  and  this  leisure  are 
out  of  the  reach  of  vast  numbers  in  the  wealthiest 
countries  of  the  world.  I  do  not  wish  to  dwell 
on  this.  We  have  had  enough  and  to  spare  of 
denunciations  of  economic  injustice  and  of  pictures 
of  social  misery.  Let  us  face  the  fact  once  for 
all,  and  not  be  blinded  to  it  by  the  "  barren  opti- 
mistic sophistries  of  comfortable  moles."  Having 
faced  it,  let  us  consider  the  remedy,  and  admit, 
once  for  all,  that  whatever  be  the  character  of 
that  remedy,  it  must  fulfil  this  first  condition  of 
distributing  the  products  of  industry  with  more 
regard  to  the  welfare  of  the  masses  than  is  paid 
by  the  blind  and  sometimes  blindly  adored  forces 
of   competition. 

The  moralist  is  also  concerned  lest  we  should 
insist  too  much  on  rights  and  too  little  on  duties, 
too  much  on  machinery  and  too  little  on  the  social 
spirit.  But  the  better  distribution  of  wealth  is 
likely  to  carry  with  it  a  better  distribution  of 
duties.  A  system  which  provides  that  all  shall  eat 
and  be  filled  will  have  of  necessity  to  secure  that 
all  who  are  able-bodied  shall  first  work.  The 
only  doubt  is  whether  the  stern  disciplinarians 
who  insist  on  self-support  fully  realise  the  revolu- 
tionary nature  of  their  doctrine.  If  a  system  is 
wrong  which  maintains  an  idle  man  in  bare 
necessaries,  a  system  is  much  more  wrong  which 
maintains   an   idle  man   in   great   superfluity,  and 


LABOUR  AND  WEALTH  17 

any  system  which  allows  the  inheritance  of  wealth 
on  the  great  scale  is  open  to  criticism  on  this 
side.  People  are  apt  to  forget  that  property  is  a 
social  institution,  that  if  they  can  count  securely 
on  enjoying  what  they  have  earned,  saved,  or  in- 
herited, it  is  because  the  State  provides  judges,  and 
policemen,  and  prisons,  to  guarantee  their  rights 
and  to  punish  depredators.  Forgetting  this,  they 
are  apt  to  think  of  what  is  "  their  own  "  as  part 
of  themselves,  and  even  if  it  has  been  acquired 
without  service  rendered  as  emancipating  them 
morally  from  the  common  lot  which  decrees  that 
in  the  sweat  of  his  brow  man  shall  eat  bread.  In 
fact,  it  seems  sometimes  to  be  regarded  as  quite 
a  providential  arrangement  that  some  should  be 
born  without  the  necessity  of  working  for  their 
own  living  so  that  they  have  leisure  to  impose  this 
fundamental  duty  on  others.  We  need  not  for  the 
moment  ask  ourselves  whether  the  inheritance  of 
wealth  is  a  good  or  a  bad  thing.  Of  this  we  shall 
have  to  speak  briefly  in  its  place.  We  are  con- 
cerned only  to  insist  that  any  criticism  of  the 
economic  system  should  be  applied  impartially,  and 
on  this  understanding  we  need  have  no  hesitation 
in  accepting  the  doctrine  that  a  good  system  must 
emphasise  obligations  just  as  much  as  rights,  work 
just  as  much  as  reward. 

Again,  we  need  not  quarrel  with  the  disciplinarian 
when  he  lays  emphasis  on  "  character,"  but  we 
may  remark  that  the  kind  of  character  that  is  to 
be  most  admired  is  a  point  on  which  people  may 
differ.  For  our  part  we  shall  certainly  decline 
to  regard  competitive  commercialism  as  a  kind  of 
lifelong  examination  in  which  the  highest  character 
gets  top  marks.  On  the  contrary,  we  are  so  far 
impressed  with  the  evils  that  competition  brings 
in   its   train  that  we   should  admit  that   no   mere 

2 


18  THE  LABOUR  MOVEMENT 

change  of  machinery  can  undo  the  moral  damage 
it  has  done.  Machinery — laws,  administration,  or- 
ganisations— are  after  all  valuable  only  as  the  lever 
by  which  the  moral  forces  of  society  can  work. 
Mere  reform  of  machinery  is  worthless  unless  it  is 
the  expression  of  a  change  of  spirit  and  feeling. 
If  economic  reform  meant  nothing  but  economic 
reform,  it  would  leave  the  nation  no  happier  or 
better  than  before.  The  same  dishonesty,  the  same 
meanness,  the  same  selfish  rapacity  would  simply 
find  different  outlets.  But  if  machinery  without 
moral  force  is  worthless,  good  intentions  without 
machinery  are  helpless,  A  better  spirit,  if  it  is 
to  survive,  must  be  incarnated  in  better  institu- 
tions, and  if  there  is  to  be  a  keener  sense  of  justice, 
a  livelier  feeling  for  the  common  good,  a  broader 
and  deeper  sense  of  common  responsibility,  these 
qualities  must  find  avenues  of  expression  in  the 
normal  working  of  the  social  system. 

The  better  distribution  of  wealth,  then,  it  may 
be  granted,  is  not  the  be-all  and  end-all  of 
progress.  But  the  existing  maldistribution  is, 
industrially,  the  gravest  and  most  distressing 
symptom  of  a  deep-seated  disease.  If  we  would 
consider  how  to  regain  social  health,  we  may  take 
advantage  of  the  metaphor  and  consider  that 
health  consists  in  the  co-operation  of  many  func- 
tions, wherein  each  organ  must  obtain  its  due 
of  nourishment,  to  repair  the  waste  which  its 
action  involves.  In  the  body  this  relation  of 
function  and  nourishment  is  called  Health.  In 
Society  it  is  called  Justice.  In  both  cases  there 
may  be  over-nourishment  here  and  under-nourish- 
ment  there,  and  in  both  cases  with  bad  results. 
The  difference  is  that  in  the  case  of  the  body 
there  is  one  individual  which  suffers  equally  in 
either   event.      In    the    case   of    society    the   mal- 


LABOUR  AND  WEALTH  19 

adjustment  may  be  felt  as  want  and  misery  by 
one  man  and  as  a  misplaced  self-complacency 
by  another.  But  in  proportion  as  the  social  con- 
sciousness develops  it  becomes  less  tolerant  of 
these  contrasts.  It  seeks  a  fuller  and  therefore 
a  more  equitable  co-operation.  It  comes  to  regard 
work  more  and  more  definitely  as  a  public  service, 
and  accordingly  concerns  itself  more  and  more 
closely  with  the  conditions  under  which  it  is  per- 
formed, and  with  the  measure  of  its  reward.  But 
this  conception  raises  many  questions  of  difficulty. 
It  compels  us  to  ask  on  what  principles  reward 
should  be  based,  to  what  extent  society  can  or 
should  control  the  aims  and  methods  of  industry, 
what  kind  or  degree  of  responsibility  is  left  to 
the  individual,  and  what  function  remains  for  the 
voluntary  association  which  stands  intermediate 
between  the  individual  and  the  State.  I  propose 
to  approach  these  questions  in  the  first  instance 
by  taking  the  movements  named  above — Trade 
Unionism,  Co-operation,  Municipal  and  State 
Socialism — and  asking  of  each  in  turn  what  it 
has  to  contribute  to  the  ideal  of  an  equitable 
co-operation,  what  it  is  doing  at  the  present  day, 
and  what  it  contains  of  promise  and  potency  for 
the  future,  whether  it  is  of  permanent  or  tem- 
porary value,  whether  it  is  sufficient  of  itself  for 
all  good  purposes  or  needs  other  movements  to 
supplement  its  defects. 


CHAPTER  II 

TRADE  UNIONS  AND  THE  CONDITIONS  OF 

LABOUR 

A  Trade  Union  is  an  association  of  wage-earners 
in  a  given  industry  for  the  purpose  of  securing 
the  best  possible  conditions  of  labour  for  the 
workers  in  that  industry.  It  owes  its  existence, 
as  the  historians  of  the  movement  have  shown, 
to  the  sharp  separation  of  employers  and  em- 
ployed. As  long  as  the  workman  can  easily  rise 
in  the  industrial  scale,  and  has  hopes  of  becoming 
an  employer  in  his  turn,  he  is  unwilling  to  enter 
into  a  permanent  combination  against  employers, 
and  if  such  combinations  are  formed  they  are 
always  liable  to  be  drained  of  their  most  capable 
members.  Even  in  industries  where  the  workman, 
though  without  hopes  of  becoming  an  employer, 
may  rise  steadily  and  perhaps  rapidly  from  one 
grade  to  another,  stable  and  comprehensive  com- 
binations are  hard  to  maintain.  The  compara- 
tive weakness  of  combinations  among  railwaymen 
sufficiently  illustrates  this  point.  A  Trade  Union 
is  effective  in  proportion  as  the  workers  in  an 
industry  are  brought  into  close  contact  with  one 
another  and  are  pervaded  by  the  sense  of  a 
common  interest.  The  same  conditions  govern 
the  extension  of  combination  from  the  individual 
workshop  to  a  locality,  from  a  locality  to  a  national 
branch  of  industry,  and  from  a  branch  of  industry 
to  the  wage-earning  class  as  a  whole.  Trade 
Unionism  in  our  time  has  become  a  national  move- 


TRADE  UNIONS  21 

ment  because,  in  spite  of  great  divergences  of 
interest  as  between  one  occupation  and  another 
and  between  one  grade  of  workers  and  another, 
there  are  certain  principles  which  appeal  to  all 
men  who  work  with  their  hands  for  a  weekly- 
wage  and  inspire  them  with  a  sense  of  solidarity. 
Combination  might  seem  the  natural  refuge  of 
isolated  workers  beaten  down  to  starvation  point 
by  the  iron  laws  of  competition.  But  history  shows 
us  that  revolutions  seldom  occur  when  they  are 
most  needed— that  is  to  say,  at  the  extreme  point 
of  depression.  People  who  have  sunk  too  low 
lose  the  recuperative  power  which  would  help  them 
to  rise  again.  The  history  of  labour  movements 
is  no  exception  to  the  general  rule.  The  great 
and  enduring  Trade  Unions  have  generally  been 
formed  among  the  better  paid  and  more  skilled 
artisans,  and  it  is  still  uncertain  how  far  the  mass 
of  unskilled  labourers  can  prove  themselves  capable 
of  forming  durable  combinations.  Now,  a  close 
combination  of  highly  skilled  workmen  may  com- 
mand and  deserve  little  sympathy  from  the  general 
public.  It  may  be  inspired  by  all  the  ambitions 
of  a  narrow  ring  of  monopolists,  and  it  would  be 
ill  to  deny  that  the  monopolistic  spirit  has  ever 
swayed  a  Trade  Union.  Fortunately,  it  has  in  the 
main  been  checked  and  overborne  by  a  wider 
feeling  of  class  sympathy,  and  particularly  since 
the  advent  of  the  "  New  Unionism  "  in  the  later 
years  of  last  century,  the  highly  organised  work- 
man has  tutored  and  led  and  at  times  effectively 
assisted  his  less  fortunate  brother.  Combinations 
of  unskilled  labour  have,  in  fact,  been  formed 
from  time  to  time  with  striking  temporary  success, 
as  witness  the  movements  of  the  past  year.  Nor 
do  such  movements  pass  away  without  leaving 
at    least   a  nucleus   of   solid   organisation    behind. 


22  THE   LABOUR  MOVEMENT 

A  permanent  and  dominant  force  among  miners 
and  artisans,  combination  is  at  lowest  a  principle 
of  spasmodic  but  recurrent  and  effective  energy 
among    workers    of    lower    grades. 

Thus  the  organised  workmen  are  in  a  way  the 
leaders  of  the  working  class  as  a  whole.  As 
such,  and  as  controlling  labour  conditions  in  the 
great  industries  of  the  country,  they  have  an  influ- 
ence out  of  all  proportion  to  their  numbers.  The 
actual  number  of  Trade  Union  members  has  no 
doubt  grown,  not  only  in  absolute  figures,  but  in 
proportion  to  the  working  population,  as  the 
following  figures  show  : — 

Members  of  Trade  Unions." 

1900   i)957'7io 

1905   1,923,868 

1907   2,412,611 

1909   2,347,461 

The  last  figure  includes  207,518  female  mem- 
bers. Thus  the  male  Trade  Unionists  barely 
exceed  one-fourth  of  the  eight  million  or  more 
of  workmen  in  regular  employment,  and  the  in- 
fluence of  Trade  Unionism  is  at  bottom  an  effect, 
not  of  quantity  but  of  quality. 

Among  the  conditions  of  labour.  Trade  Unions 
are  mainly  concerned  with  the  hours  of  work  and 
its  remuneration.  Their  avowed  object  is  to  obtain 
a  "  fair  day's  pay  for  a  fair  day's  work,"  and 
that  for  all  workers.  But  these  are  terms  that 
require  some  definition.  As  to  the  "  fair  day's 
work,"  the  difficulty  is  not  so  great.  It  would 
be  generally  agreed  that  it  should  bear  a  close 
relation  to  the  strain  put  upon  physical  and  mental 
energies.     A  man's  work  ought  to  give  full  exercise 

'  "Abstract  of  Labour  Statistics,  1908-9"  (published  in  191 1), 
pp.  176-7.  "Only  those  Trade  Unions  are  included  for  whicn 
complete  comparative  information  is  available.  The  Unions 
excluded  are  few  and  generally  unimportant." 


TRADE  UNIONS  23 

to  his  faculties,  physical  or  mental,  and  never  to 
overtax  them,  and  wherever  work  is  adjusted  to 
this  equation  there  a  fair  day's  work  is  being 
done.  This,  of  course,  implies  considerable  differ- 
ences between  one  occupation  and  another.  Many 
brain -workers  find  five  hours  a  day  their  limit.  If 
they  attempt  more,  they  effect  less.  Darwin 
worked  four  hours  a  day  with  great  regularity, 
and  he  cannot  be  accused  of  unproductiveness. 
On  the  other  hand,  a  man  may  be  on  duty  for 
ten  or  twelve  hours,  and  have  little  consecutive 
effort  to  tax  him.  But  at  this  point  another  con- 
sideration enters.  A  man  or  woman  needs  leisure 
from  regular  work,  even  if  it  be  light  in  itself, 
if  he  or  she  is  to  be  anything  more  than  a  "  hand." 
The  more  mechanical  the  work  the  greater  the 
need  of  ample  time  for  exercising  the  more  human 
faculties  and  living  the  life  of  a  civilised  beiiig. 
Upon  the  whole  the  "  eight -hour  day,"  which  has 
long  been  a  watchword  in  the  Trade  Union  world, 
is  an  intelligible  ideal,  but  it  is  to  be  regretted 
that  the  attention  of  legislators  has  not  long  since 
been  directed  to  the  cases,  not  as  rare  as  they 
should  be,  of  far  longer  hours.  That  it  should 
have  been  necessary  for  carters  to  secure  a  week 
of  seventy-five  hours  by  a  strike  in  191  i  is  some- 
thing of  a  disgrace  to  our  industrial  code. 

The  "  fair  "  wage  is  something  much  less  easy 
to  define  on  any  comprehensive  principle. 

The  phrase,  indeed,  is  probably  used  in  every 
trade  dispute  that  arises,  but  if  a  precise  definition 
could  be  attached  to  it  perhaps  there  would  be 
fewer  disputes  than  there  are.  Without  here  at- 
tempting a  general  definition  it  may  be  allowable 
to  offer  a  few  considerations,  all  of  which  may 
be,  and  perhaps  are,  taken  into  account  by  em- 
ployers   and    employed    at    the    present    day,    and 


24  THE  LABOUR  MOVEMENT 

might  be  more  fully  acted  on  by  a  more  developed 
industrial  organisation.  In  asking  what  wages  are 
fair,  I  shall  mean  by  "  fair  wages  "  the  amount 
we  should  fix  if  we  had  the  fixing  in  our  power  ; 
in  other  words,  I  shall  inquire  how  a  well-ordered 
society  would  fix  the  rate  of  wages  if  it  had  the 
whole    distribution   of   wealth   under   its    control. 

Any  actual  negotiation  with  regard  to  wages  of 
course  starts  from  the  amount  actually  paid,  and 
any  reduction  would  be  felt  as  "  unfair  "  by  the 
workpeople  unless  it  were  proved  to  be  necessary 
by  the  conditions  of  trade.  Conversely  any  rise 
would  be  regarded  as  "  unfair  "  by  employers  un- 
less it  could  be  shown  to  be  compatible  with  those 
conditions,  and  among  them  the  provision  of  a 
fair  profit  for  the  employer  would  be  one.  But 
this  only  throws  us  back  on  the  question,  What  is 
a  fair  profit?  What  we  need  is  something  to  tell 
us  what  is  fair,  whether  we  are  dealing  with  profits 
or  wages,  or  indeed  with  any  division  of  the  fruits 
of  industry  and  commerce.  Now,  in  any  dealings 
between  men,  one  thing  is  sufficiently  clear  :  a  man 
will  not  consider  the  result  fair  to  him  if  it  leaves 
him  worse  off  than  he  was  before.  Whether  he 
buys  or  sells,  the  least  that  he  expects  is  equal 
value.  You  may  say  that  he  expects  more  than 
this,  that  he  expects  a  profit  since  otherwise  he 
would  not  be  at  the  pains  to  go  into  the  bargain, 
but  as  to  this  two  remarks  must  be  made.  The 
first  is  that  if  the  bargain  is  fair,  one  party  must 
not  gain  at  the  expense  of  the  other  ;  both  must 
gain,   the   profit  must   be   divided   between   them.' 

'  How,  then,  it  may  be  asked,  does  profit  arise  ?  A  may 
profit  at  the  expense  of  B,  or  B  at  the  expense  of  A,  but  how 
can  A  and  B  both  make  a  profit  by  an  exchange  of  their  goods  ? 
A  simple  illustration  will  explain.  A  buys  a  pair  of  boots  for 
fifteen  shillings.  He  would  rather  pay  £i  than  go  without  a  new 
pair.  B  would  rather  sell  for  ten  shillings  than  not  sell  at  all. 
The  transaction  is  profitable  to  both. 


TRADE  UNIONS  25 

The  second  is  that  if  the  profit  is  needed  as  an 
inducement  to  take  the  trouble  necessary  to  the 
bargain,  then  if  a  man  takes  the  trouble  and  ob- 
tains no  profit,  he  gets  less  than  equal  value,  he 
is  to  that  extent  worse  off  than  he  was  before  he 
went  into  the  transaction.  This  being  understood, 
we  may  say  that  in  any  transaction  a  fair  appor- 
tionment is  one  which  gives  back  to  each  man 
value  equal  to  that  which  he  has  put  in,  of  his 
goods,  his  time,  his  trouble,  his  risk,  his  brains, 
and  so  forth,  while  if  there  is  any  surplus  remain- 
ing when  such  an  apportionment  has  been  made, 
it  is  divided  among  all  the  parties  to  the  trans- 
action. The  apportionment  of  this  surplus  will 
be  considered  later.  It  does  not  come  into  con- 
sideration till  each  party  has  received  its  equal 
value,  and  this  value  has  therefore  to  be  deter- 
mined first.  Now,  when  a  man  puts  money  or 
measurable  money's  worth  into  a  business  it  is 
possible  to  state  in  figures  the  equal  value  which 
he  will  expect,  but  besides  the  man  who  puts  money 
into  a  business  there  may  be  a  man  who  puts  brain 
into  the  business  and  a  man  who  puts  muscular 
work  into  the  business.  What  in  their  case  is  the 
equal  value  to  which  they  are  entitled?  Consider 
the  manual  worker.  What  he  expends  is  his 
energy,  an  expenditure  involving  a  certain  waste 
of  tissue,  and  the  value  equal  to  this  is  at  least 
such  a  wage  as  makes  good  that  waste.  Now, 
what  does  this  waste  involve?  The  worker  puts 
out  so  much  muscular  energy  in  the  day.  Like  a 
steam-engine,  he  must  be  fed  or  he  will  run  down. 
Physiologists  know  that  there  is  an  equation 
between  the  stores  of  energy  absorbed  by  the 
body  in  food  and  the  output  of  energy  in  the  form 
of  manual  work  and  heat.  But  though  like  a  steam- 
engine  in  requiring  a  supply  of  energy  from  with- 


26  THE  LABOUR  MOVEMENT 

out,  the  worker  is  very  unlike  the  steam-engine  in 
two  things.  On  the  one  hand,  he  cannot  work  un- 
ceasingly and  yet  must  be  kept  going  with  his 
fires,  so  to  say,  still  alight  during  the  hours  of 
rest.  On  the  other  hand — unfortunately  for  him 
in  the  world  of  competition — he  can  make  shift 
to  do  for  a  time  without  enough  coal.  Thus  the 
equation  between  intake  of  food  and  output  of 
energy  only  works  itself  out  in  course  of  time. 
It  is  only  by  degrees  that  insufficient  food,  bad 
housing,  want  of  warmth,  lack  of  proper  clothing 
will  tell  on  the  health,  and  through  the  health  on 
the  efficiency  of  work.  Hence  it  is  that  low  wages 
may  pay  if  there  is  no  necessity  to  retain  the  work- 
man over  the  time  in  which  the  ill  effects  of  low 
wages  will  have  begun  to  tell  on  his  work.  But 
we  can  now  begin  to  see  the  kind  of  wage  which 
the  worker  will  regard  as  fair.  It  must  be  enough 
to  repay  him  for  what  he  puts  into  the  work,  and 
what  he  puts  into  the  work  is  his  strength,  and 
his  strength  depends  on  his  health. 

But  this  is  by  no  means  the  whole  of  the  matter. 
The  hardj,  muscular  man  who  gets  the  coal  at  the 
face  in  a  given  mine  has  not  only  to  repair  from 
day  to  day  the  waste  of  his  own  muscular  tissue 
and  to  keep  himself  fit  for  his  arduous  work.  From 
the  point  of  view  of  this  particular  mine,  indeed, 
that  is  all  that  is  required.  But  from  the  social 
point  of  view,  more  is  necessary.  This  powerful 
man  was  once  a  child  dependent  on  others  ;  he 
is  still  liable  to  sickness  or  disablement,  and  he 
hopes  to  live  to  an  old  age  when  he  will  no  longer 
spend  his  days  at  the  face  of  the  seam.  The 
just  equivalent  of  his  work  is  support  through  all 
these  changes  and  contingencies.  Again,  as  his 
own  childhood  had  to  be  supported  by  others,  so  he 
should  be  able  to  support  children  to  replace  him, 


TRADE  UNIONS  27 

and  the  wife  that  brings  them  up,  and  to  provide 
for  his  own  old  age  and  hers,  and  for  all  the 
manifold  contingencies  of  life.  At  any  rate, 
whether  out  of  his  wages  or  from  other  sources, 
all  this  burden  has  to  be  met  if  the  national 
industry  is  to  be  maintained  as  a  going  concern 
without  loss. 

We  can  lay  it  down  now  in  general  terms  that 
what  is  fair  to  each  party  in  industry  is  that 
which  at  least  makes  good  the  contribution  of  that 
party,  or  in  other  words  suffices  to  stimulate  and 
to  maintain  in  permanent  and  efficient  working 
order  the  particular  function  which  the  party  per- 
forms. Thus  the  minimum  that  an  adult  male 
worker  is  entitled  to  regard  as  a  fair  wage  is 
the  amount  on  which  he  can  maintain  an  average 
family  in  complete  health.  For  it  is  only  by  the 
maintenance  of  a  healthy  population  that  the  func- 
tion of  labour  can  be  permanently  maintained  in 
efficient  working  order.  Nor,  if  we  look  at  the 
matter  more  simply,  just  as  a  question  of  the  social 
welfare,  can  we  doubt  that  this  is  the  minimum 
which  it  is  desirable  that  any  class  of  worker 
should  enjoy.  That  any  substantial  proportion  of 
society  should  still  be  unable  by  honourable  work 
to  supply  themselves  adequately  with  the  means 
of  a  healthy  livelihood  is  a  challenge  to  our  entire 
civilisation.  It  throws  a  shadow  of  doubt  over 
all  our  progress,  a  shadow  which  nothing  could 
darken  but  the  comparative  indifference  with  which 
those  of  us  who  are  more  fortunately  placed  con- 
template the  mass  of  suffering  that  passes  under 
our  eyes   day  by   day. 

Of  the  methods  by  which  these  wrongs  may  be 
redressed  we  must  speak  more  fully  farther  on. 
But  there  remain  several  points  to  clear  up  with 
regard  to  the   fair   wage.      Observe   first   that  as 


28  THE  LABOUR  MOVEMENT 

the  social  view  is  longer  and  wider  than  that  of  the 
single  industry,  so  it  is  deeper  and  more  exacting. 
Socially  what  is  required  of  every  man  is  not 
merely  that  he  should  be  a  physically  efficient 
worker,  but  that  he  should  fill  his  place  in  the 
social  order,  that  he  should,  in  a  word,  be  a  good 
citizen.  This  requirement  involves  a  measure  of 
mental  and  ethical  training.  It  involves  the  quali- 
fications that  distinguish  a  civilised  man  from  a 
savage  and  a  free  man  from  a  slave.  For  average 
humanity— for  we  do  not  speak  of  the  saint  on  his 
pillar,  who  may  or  may  not  be  a  desirable  element 
in  the  social  order— these  qualifications  must  have 
an  economic  basis.  They  imply  education.  They 
imply  some  postponement  of  the  routine  of  labour 
until  education  has  been  sufficiently  advanced. 
They  imply  adequate  rest  and  change  from  the 
more  brutalising  forms  of  toil.  All  these  are  part 
of  the  fair  wage  that  a  man  may  claim  of  a 
civilised  social  order.  They  represent  the  mini- 
mum necessary  to  maintain  him  in  a  life  which 
can  contribute  to  such  an  order.  If  he  fails  to 
secure  such  conditions  of  life,  he  cannot  perform 
his  functions,  and  not  only  does  he  suffer  him- 
self, but  the  social  order  suffers  through  him.  He 
may  become  an  idler  or  a  criminal.  He  may  be 
physically  enfeebled  or  morally  slack.  He  may 
turn  into  a  bad  husband  and  careless  father.  In 
all  these  ways  he  makes  others  pay,  and  misery 
spreads.  Conversely  it  is  not  only  good  for  him 
but  best  for  society  as  a  whole  that  he  should  be 
able,  as  the  reward  of  work,  to  secure  the  material 
conditions,  not  only  of  a  healthy  life  but  of  what 
we  may  call  succinctly  a  civic   life.' 

'  It  will  be  seen  that  there  is  a  possible  discrepancy  between 
what  is  "  fair  "  from  the  industrial  and  what  is  fair  from  the 
social  point  of  view.    A  piece  of  work  may  require  no  faculties 


TRADE  UNIONS  29 

Next  we  may  remark  that  the  wherewithal  of 
these  conditions  might  be  obtained  through  the 
regular  weekly  wage.  For  this  purpose  the  wage 
would  have  to  be  enough,  not  only  to  maintain 
an  average  family,  but  to  meet  all  the  con- 
tingencies of  life,  to  provide  education  and 
rational  amusement,  to  lay  by  against  sickness, 
unemployment,  disability,  and  old  age.  Where 
remuneration  is,  in  fact,  sufficient  to  cover  all 
these  liabilities,  people  are  expected  to  make  pro- 
vision for  themselves  and  their  families  accord- 
ingly. It  is  the  growing  sense  of  the  inadequacy 
of  the  wages  of  manual  labour  in  general  to  meet 
these  requirements  which  is  prompting  the  State 
to  undertake  some  of  them  for  the  worker,  and  to 
assist  him  in  respect  of  others.  Of  the  economics 
of  such  provision  we  shall  speak  later.  For  the 
moment  we  have  only  to  note  that  in  so  far  as 
any  requirement  is  supplied  from  other  sources,  it 
reduces  the  minimum  which  the  "  fair  "  wage  must 
cover.  For  the  present,  however,  we  may  take 
the   minimum   amount    of    the   fair    wage    as    that 

but  those  of  a  healthy  animal ;  it  is,  industrially,  overpaid  by 
a  wage  that  barely  suffices  for  the  "  civic  life."  Conversely 
labour  so  mechanical  is,  for  a  life  work,  something  of  a  degrada- 
tion to  a  human  being.  Thus  there  is  loss  to  both  parties,  to  the 
worker  and  the  industry.  This  equalises  matters  in  a  sense  but 
in  a  disastrous  sense.  The  discrepancy  may  be  partially 
remedied  by  provision  for  some  of  the  workman's  needs  out  of 
the  surplus  wealth  of  the  nation,  but  is  fully  overcome  only  when 
the  conditions  of  industry  are  such  that  the  lowest  quality  of 
labour  employed  is  worth  the  socially  fair  wage  and,  in  fact,  earns 
it.  We  shall  see  later  that  at  least  an  approximation  to  this 
equation  is  in  practice  a  condition  of  the  attainment  and 
maintenance  of  a  fair-wage  standard.  Meanwhile  note  that  for  us 
the  social  point  of  view  governs  the  economic.  Wc  are  consider- 
ing the  individual  in  account  with  society  and  are  asking  what 
is  due  to  him  and  from  him  to  the  entire  structure  of  social 
organisation.  The  answer  is  on  the  one  side  the  conditions,  on 
the  other  the  active  fulfilment  of  a  civic  life. 


30  THE   LABOUR  MOVEMENT 

which  will  maintain  an  average  family — a  man, 
wife,  and  three  children — in  healthy  and  socially 
desirable  conditions,  including  the  provision 
against  sickness  (and,  in  certain  trades,  unem- 
ployment) which  the  Insurance  scheme  will 
require,  and  including  provision  against  any  other 
contingencies  with  which  the  State  does  not  deal. 

Further,  we  must  insist  that  the  wages  of  an 
adult  man  alone  should  suffice  to  meet  these 
requirements.  True,  the  wife  may  be  a  wage- 
earner,  but  so  far  as  she  gives  her  time  to  industry 
it  is  withdrawn  from  the  management  of  the  home 
and  the  care  of  the  children.  That  this  is  generally 
desirable  few  would  maintain,  and  in  any  case 
where  it  occurs  an  equivalent  expenditure  on 
housekeeping  and  on  the  care  of  the  children  is 
needed.  Equally  it  is  desirable  that  the  house- 
hold should  be  independent  of  the  children's  earn- 
ings, so  that  their  school  life  may  be  prolonged 
considerably  beyond  the  present  limit,  and  that 
when  they  begin  to  earn  thej  should  be  able  to 
provide  for  themselves  and  their  own  future.  We 
take  the  standard  of  family  needs,  then,  as  govern- 
ing the  minimum  for  an  adult  male  worker  at  the 
height  of  his  powers.  In  the  case  of  women 
workers  the  desirable  minimum  is  not  quite  so 
easy  to  define.  But  it  is  much  too  hastily  assumed 
that  the  woman  has  only  to  provide  for  herself. 
The  tragedy  of  woman's  work  is  that  a  widow,  a 
deserted  wife,  an  unmarried  mother,  or  perhaps  a 
spinster  with  an  invalid  sister,  has,  in  fact,  to 
support  others  on  a  wage  which  is  barely  enough 
to  support  herself.  A  woman  worker  may 
ordinarily  be  regarded  as  having  others  to  support, 
but  those  others  ought  not  to  include  a  husband 
or  any  male  relation.  The  husband  ought  to  be 
punished  if  idle,  and  if  invalided  or  incompetent 


TRADE  UNIONS  31 

he  ought  to  be  'supported  by  public  charity. 
Having  this  in  view,  we  may  get  at  a  definition 
near  enough  for  our  purposes  if  we  take  the 
woman's  wage  as  that  which  would  support  the 
average  family  minus  the  husband — that  is  to  say;, 
as  enough  to  support  the  woman  herself  and  three 
children.  Whether,  indeed,  it  is  good  economy  to 
compel  the  mother  of  young  children  to  work  out- 
side the  home,  instead  of  regarding  her  services 
as  a  mother  as  entitling  her  to  adequate  public 
maintenance,  is  a  further  question.  But  it  does 
not  concern  our  immediate  problem,  which  is  that 
of  defining  the  minimum  wage. 

Now,  if  we  confine  ourselves  to  the  male  worker, 
it  is  possible  to  translate  the  definition,  by  the 
aid  of  Mr.  Seebohm  Rowntree's  researches,  into 
approximate  figures.  It  will  be  best  to  give  Mr. 
Rowntree's    own    words  '  : — 

"  Let  us  lay  out  the  labourer's  weekly  wage, 
eliminating  all  waste  due  to  ignorance  or  laziness. 
First,  then,  it  will  cost  13s.  gd.  a  week  to  provide 
a  family  of  two  adults  and  three  children  with 
the  nutriment  necessary  for  physical  efficiency 
even  if  we  choose  a  dietary  more  stringently 
economical  than  that  of  any  workhouse  in  England 
or  Wales — one  containing  no  butcher's  meat,  and 
bacon  only  three  times  a  week  ;  where  margarine 
is  substituted  for  butter,  and  porridge  and  skim 
milk  figure  largely  in  place  of  the  usual  tea  and 
bread  and  butter.  Adding  2s.  3d.  for  clothing, 
IS.  lod.  for  coal,  and  2d.  per  head  for  sundries,, 
we  get  23s.  8d.  as  the  absolute  minimum  on 
which  a  family  of  five,  paying  5s.  for  rent,  can 
be  maintained  in  a  state  of  physical  efficiency. 
It  must  be  remembered  that  this  sum  allows 
nothing  for  sick-clubs  or  Trade  Unions,   or   beer 

'  Contemporary  Review,  October  nth,  p.  454. 


32  THE  LABOUR  MOVEMENT 

or  tobacco,  or  trams  or  travelling,  or  amusement 
or  newspapers,  or  writing  materials  and  stamps  ; 
and  if  an  evening  paper  is  bought  or  the  children 
have  coppers  given  them  to  go  and  see  the 
'moving   pictures,'   physical   efficiency   suffers." 

To  put  it  in  a  slightly  different  way,  i8s.  8d. 
plus  house  rent  represents  the  barest  minimum 
for  an  average  family.  In  a  town  this  will 
generally  mean  about  23s.  8d.,  in  the  country 
rather  less,  say,  21s.  6d.  To  make  a  real 
minimum  living  wage  it  is  easy  to  see,  from  what 
Mr.  Rowntree  says,  that  something  substantial 
must  be  added.  It  could  hardly  be  called  ex- 
travagant if  we  put  the  additional  sum  at  5s. 
But  it  will  be  safer  to  say  roundly  that  something 
between  20s.  and  25s.  is  the  minimum  in  the 
country  districts,  and  something  between  25s.  and 
3 OS.  in  towns. 

Now  let  us  turn  to  the  actual  figures.  In  the 
same  article  Mr.  Rowntree  gives,  on  the  authority 
of  Professor  Bowley,  a  table  showing  that  of  an 
estimated  population  of  8,000,000  men  employed 
in  regular  occupations — 


4  per  cent,  earn  less  than  15s. 

8        „  „      from  15s.  to  20s. 

20  „  „  „            20s.  to  25s. 

21  „  „  „            25s.  to  30s. 


These  figures,  of  course,  include  agricultural 
labourers,  but  excluding  them  they  show  that  at 
least  i^  million  industrial  workers  earn  less  than 
25s.  a  week.  If,  again,  we  consider  agricultural 
labourers,  we  find  that  the  average  weekly  earn- 
ings of  an  "  ordinary  labourer  "  in  England  are 
given  at  17s.  6d.,  of  men  in  charge  of  horses  at 
19s.,  of  cattlemen  at   19s.   3d.,  and  of  shepherds 


TRADE   UNIONS  33 

at  19s,  7d.i  It  is,  then,  sufficiently  clear  that  some 
32  per  cent,  of  the  entire  working  population  earns 
less  than  the  minimum  defined,  while  the  earnings 
of  another  21  per  cent,  range  round  the  minimum 
a  little  above  or  a  little  below— that  is  to  say,  they 
are  from  25s.  to  30s.  a  week.  It  must  be  added 
that  these  are  the  earnings  of  men  in  regular  em- 
ployment, that  no  allowance  is  made  for  unem- 
ployment and  no  account  taken  of  the  casual 
labourer.  It  needs  no  further  argument  to  show 
that  the  actual  deficiency  of  remuneration  con- 
stitutes the  greatest  economic   problem. 

But  before  considering  this  problem  we  have 
a  word  to  add  on  the  idea  of  the  fair  wage.  What 
we  have  been  considering  hitherto  is  the  minimum. 
We  are  not  urging  that  no  one  should  get  more, 
but  only  that  no  one  should  get  less.  Some 
thinkers,  it  is  true,  have  held  actual  equality  of 
remuneration  to  be  the  ideal.  Others  have  said 
that  there  are  two  forms  of  injustice.  One  consists 
in  treating  equals  unequally,  the  other  in  treating 
unequals  equally.  If,  again,  one  school  of 
Socialistic  thought  has  pressed  equality  of  reward, 
another  has  laid  stress  on  the  right  of  each  man 
to  the  whole  produce  of  his  labour,  and  has  found 
the  iniquity  of  the  competitive  regime  to  lie  in  the 
power  of  the  capitalist  to  take  toll  of  the  worker's 
product.  In  point  of  fact  it  is  impossible,  in  the 
complexities  of  an  economic  order  such  as  that 
of  the  modern  world,  to  treat  the  matter  from 
the  point  of  view  of  the  individual  alone,  since, 
apart  from  any  other  consideration,  it  is  generally 
impossible  to  assign  any  separate  value  to  the 
product  of  a  single  worker.     We   must   keep   to 

'  Standard  Time  Rates  of  Wages  in  the  United  Kingdom  1910, 
(Labour  Dept.,  Cd  5459).  The  figures  in  each  case  allow  for  the 
addition  of  the  "  estimated  value  of  allowances  in  kind  "  to  actual 
cash  wages. 

8 


34  THE   LABOUR  MOVEMENT 

our  assumed  standpoint.     We  are  supposing  our- 
selves, that  is  to  say,  for  the  moment  to  possess 
plenary  power  to  determine  every  one's  reward,  and 
we  are  asking  on  what  principles  we  are  to  pro- 
ceed.     One  of  the   first   things   that   would  strike 
us   if  we  were   in  that   position   would  be  that   in 
the  value  of  the  work  that  they  do  men  are  very 
unequal,    and   we   should   have   to    deal    with   this 
inequality.      In   doing   so   we   should    have    to   be 
guided   by   the   requirements   of   production.      We 
should    be    responsible    for    maintaining    and    im- 
proving the  efficiency  of  industry,  regarded  as  the 
mechanism  by  which  society  supplies  its  material 
needs.      We   have   agreed   that   every   one   who   is 
employed  at  all  should  receive  the  minimum  wage. 
Could  we,  then,  expect  for  the  same  wage  to  get 
men    to   face    the    most   arduous    and    unpleasant 
forms  of  work,  to  acquire  and  apply  the  highest 
skill,   to  put   forth  the  utmost  of   their  efforts,  to 
give  us  the  best  of  their  brain  power?     We  might 
expect  these  results  in  Utopia,  but  not,  I  fear,  in 
the  world  as  we  know  it.     It  is  true  that  the  best 
and  highest  talents  never  have  been  paid  for,  and 
perhaps  work  better  without   pay.     Many   a  poet 
of    the    first    order    has    had    to    be    content    with 
less    remuneration    than    a    literary    hack — "  What 
porridge  had  John  Keats?  "     But  the  genius  is  an 
exception   to   all   rules,    and   it    is    fair   to   say   of 
creative  work — literary,   artistic,   or   scientific — that 
it  is  in  a  measure  its  own  reward.     It  carries  an 
interest    and    a    perpetually    renewed    stimulus    of 
its    own    which    no    enthusiasm    of    social    service 
could  ever  impart  to  mechanical  drudgery.     Men 
who  work  without  recognition  are  the  salt  of  the 
earth,   but   precisely  because   they  are   the   salt   it 
does  not  do  to  generalise  from  them  to  the  whole 
lump . 


TRADE   UNIONS  35 

If  we  are  asked  on  what  scale  remuneration  ought 
to  rise  above  the  minimum,  it  is  impossible  to  reply 
a  priori  with  any  precision.  The  principle  is  clear 
enough  ;  it  is  the  same  that  we  have  used  already. 
The  fair  wage  in  every  case  is  that  which  suffices 
to  stimulate  and  maintain  in  permanence  the 
function  which  is  socially  necessary.  If  we  were 
really  in  that  position  of  responsibility  which  I 
have  imagined,  I  take  it  that  we  should  have  to 
be  guided  by  experience.  If  we  found  that  we 
could  not  get  the  ability  that  we  required 
at  a  given  rate,  we  should  have  to  raise  the 
rate.  The  only  general  principle  that  we  could 
apply  is  that  the  minimum  is  more  important 
than  the  maximum,  and  more  generally  that 
as  we  rise  above  the  minimum  every  succes- 
sive increment  of  income  makes  less  and  less 
difference  to  the  real  wellbeing  of  the  recipient. 
If  any  particular  form  of  ability  required  so  much 
of  us  that  to  pay  for  it  we  should  have  to  deplete 
the  fund  available  for  ordinary  labour,  we  should 
have  to  put  it  down  as  too  expensive  ;  we  should 
have  to  make  shift  to  do  without  it.  It  would  not 
be,  from  our  point  of  fview,  paying  its  way.  For  our 
assumed  object  is  to  make  of  industry  an  adequate 
basis  of  effective  civic  life  for  all,  and  this  involves 
a  universal  minimum,  and,  for  as  many  as  possible, 
a  substantial  margin  over  and  above  the  minimum. 
Now,  no  one  has,  or  is  likely  to  have,  the  kind  of 
responsibility  which  I  have  imagined.  But  the 
principles  on  which  we  can  try  to  reorganise  in- 
dustrial society  are  those  which  we  should  introduce 
if  we  had  the  power,  and  they  serve  as  a  guide 
in  the  judgment  of  contemporary  events.  They 
compel  us  to  give  our  sympathy  and  support  to 
all  well-considered  efforts  to  raise  wages  to  the 
minimum,   and  for  any   work   that   involves   more 


36  THE  LABOUR  MOVEMENT 

than  average  effort  or  skill,  for  the  arduous  work 
of  the  miner  or  the  skill  of  the  spinner  or  the 
engineer,  to  something  substantially  above  the 
minimum.  In  the  concrete  this  means  that  organi- 
sations or  legislative  methods  directed  to  raising 
the  remuneration  of  ordinary  labour  to  a  level  of 
something  between  20s.  and  25s.  a  week  in  the 
country,  and  to  something  between  25s.  and  30s.  in 
urban  districts  are  fulfilling  a  vital  social  need, 
and  that  eft'orts  directed  to  the  maintenance  and 
improvement  of  the  standard  of  life  of  those  at 
present  earning  anything  from  30s.  to  50s.  a 
week  I  are  in  general  deserving  of  sympathy  and 
support.  This  is  not,  of  course,  to  say  that  every 
movement  inspired  by  these  objects  is  right  or 
wise.  Many  of  them  may  be  so  foolishly  directed 
as  merely  to  defeat  their  own  ends.  It  is  to 
say  that  society,  as  a  whole,  is  the  gainer  by  every 
improvement  in  the  economic  standard  of  those 
whose  family  incomes  fall  so  materially  below  the 
present  general  average,  provided  that  the  improve- 
ment is  not  obtained  at  the  cost  of  a  general 
loss  which  by  lowering  the  average  would  in  the 
end  defeat  itself. 

One  further  question  of  principle  remains — that 
of  those  who  do  not  rise  above  but  fall  below  the 
level  of  competence  necessary  to  earn  the  minimum 
wage.  Not  every  one  is  worth  20s.  to  25s.  a 
week.  In  this  case  what  is  to  be  done  with  him? 
Now,  at  the  present  day  we  have  a  number  of 
sinecures,  rents,  annuities,  charities,  endowments, 
workhouses,    jails,   and   other   admirable    arrange- 

■  I  take  the  figure  of  50s.  as  barely  double  the  minimum. 
Any  one  who  will  read  again  the  conditions  which  that  minimum 
is  supposed  to  secure  will,  I  think,  agree  that  to  double  it  is  to 
make  a  modest  claim  on  behalf  of  special  skill  or  arduous  labour. 
The  actual  average  family  income  in  this  country  may  be  taken 
at  from  £3  los.  to  £4. 


TRADE  UNIONS  37 

ments  fo  keep  th'e  incompetent  from:  starvation. 
If  society  were  able  to  control  industry  and  wealth 
for  the  good  of  its  own  members  as  a  whole,  I 
imagine  that  the  only  differences  in  this  respect 
would  be  two.  First,  it  would  be  only  the  in- 
competent, and  not  also  the  idle,  who  would  be 
allowed  thus  to  live  on  the  surplus  products  of 
other  men's  industry.  Idleness  would  be  regarded 
as  a  social  pest,  to  be  stamped  out  like  crime. 
Secondlv,  the  miscellaneous  selection  of  the  in- 
competent  for  suitable  provision  at  present  effected 
by  birth,  fortune,  favouritism,  intrigue,  quackery, 
and  other  means,  would  be  superseded  by  a  more 
scientific  adjustment.  All  who  could  work  would 
have  to  work,  and  those  who,  after  adequate  effort, 
proved  incompetent  to  earn  by  their  work  the 
minimum  of  a  decent  livelihood,  would  have  to 
be  treated  as  a  particular  class  of  the  infirm — 
that  is  to  say,  as  subjects  for  charity  or  for 
discipline,  or  both  combined.  The  worst  way 
of  treating  them  is  to  allow  them  to  drag  on  life 
in  semi-idleness  and  semi-starvation.  They  are 
necessarily  a  burden  on  the  surplus  produced  by 
the  work  of  other  men  and  women.  But  it  is  not 
only  inhumane  but  unwise  economy  to  seek  to 
lighten  this  burden  by  stinting  the  actual  neces- 
saries of  life.  It  is  encouraging  to  find  that  both 
the  majority  and  the  minority  of  the  Poor  Law 
Commissioners  agree  that  relief  wherever  given 
should  be  adequate,  and  this  means  that  it  should 
not  fall  short  of  the  minimum  as  we  understand  it. 
The  penalty  that  must  be  exacted  of  those  who  will 
not  or  cannot  earn  such  a  minimum  is  not  priva- 
tion of  necessaries  which  will  only  make  them 
worse,  but  such  restrictions  and  such  discipline 
as  those  responsible  for  relief  find  it  necessary  to 
impose.     I  need  not  here  go  into  questions  which 


4G3S98 


38  THE   LABOUR  MOVEMENT 

have  been  so  thoroughly  sifted  in  the  Reports 
referred  to.  For  our  present  purpose  what  is 
essential  is  merely  to  insist  that  no  fringe  of  in- 
competent labour  should  be  allowed  to  remain  to 
drag  down  by  its  competition  those  who  might 
otherwise  secure  for  themselves  the  minimum 
standard. 

Summarily,  then,  our  conclusions  are  :  (i)  that 
a  "  fair  "  wage  is  that  which  serves  to  stimulate 
and  maintain  in  permanence  a  socially  desirable 
service  ;  (2)  that  of  every  one  a  well-ordered 
society  demands  a  certain  standard  of  civic  life 
and  that  this  involves  a  certain  minimum  standard 
of  remuneration  ;  (3)  that  in  England  at  present 
prices  this  minimum  is  between  20s.  and  25s.  a 
week  in  rural  districts  and  between  25s.  and  30s. 
in  towns  ;  (4)  that  above  this  minimum  special 
effort  and  ability  have  a  fair  claim  to  such  addi- 
tional reward  as  is  in  fact  required  to  maintain  the 
supply,  provided  always  that  it  is  good  economy 
to  pay  it  ;  (5)  that  this  economy  is  directed  in  the 
first  place  to  the  establishment  of  the  minimum  and 
next  to  the  maintenance  of  the  standard  which  rises 
but  little  above  the  minimum,  the  social  value  of 
remuneration  decreasing  from  this  point  upwards 
as  the  rate  advances  ;  (6)  that  those  unable  to 
earn  the  minimum  are  proper  subjects  for  charity 
or  for  discipline,  as  the  case  may  be. 

We  have  now  to  ask  by  what  methods  these 
objects  can  be  attained,  and  whether,  indeed,  it  is 
possible  to  compass  them.  We  have  seen  that 
some  32  per  cent,  even  of  those  in  regular  em- 
ployment and  while  in  regular  employment  fall 
short,  while  another  twenty-one  per  cent,  are  in 
the  neighbourhood  of  the  minimum,  a  little  above 
or  a  little  below,  as  long  as  they  are  well  and  at 


TRADE  UNIONS  39 

work,  but  only  so  long.  Thus  the  problem  to  be 
grappled  with  is  sufficiently  big.  Now,  until  the 
other  day,  there  was  only  one  form  of  organised 
effort  which  definitely  set  itself  to  maintain  and 
improve  the  standard  of  remuneration  for  labour. 
This  was  the  Trade  Union.  Let  us,  then,  inquire 
how  the  Trade  Union  operates  and  what  measure 
of  success   it   has   achieved   or   can   achieve. 

Unfortunately,  it  is  not  possible  to  answer  these 
questions  by  a  direct  appeal  to  history  or  to  statis- 
tics. The  causes  that  affect  real  wages  are  too 
complex  to  be  readily  sifted  out.  Thus  it  is  not 
enough  to  point  out  that  in  general  wages 
have  risen  where  Unions  are  strong,  as  compared 
with  places  or  industries  in  which  they  are 
weak.  Nor  is  it  enough  to  show  that  the 
period  in  which  Unions  have  grown  has  witnessed 
a  great  improvement  in  the  whole  economic  con- 
dition of  the  classes  which  have  formed  them. 
Other  causes  besides  Trade  Unionism  have  been 
acting  during  the  period.  It  might  seem  a  more 
promising  course  to  point  to  instances  in  which 
the  Unions  have  actually  agitated  or  fought  for 
advantages  with  success.  It  would  be  easy  enough 
to  pile  up  lists  of  successes  from  all  epochs  of 
Trade  Unionism,  and  from  every  kind  of  trade. 
But  it  would  also  be  easy  to  reckon  against  them 
many  disappointments  and  defeats.  Indeed,  we 
cannot  count  by  victories  alone.  Though  a  strike 
may  be  defeated,  the  fight  may  be  justified  by 
results.!  A  brave  people  may  be  beaten,  but  can- 
not be  trampled  on  and  enslaved.  So,  to  put  it 
in   the   concrete,   a  Union  may   fight   a   reduction 

'  Disputes,  it  must  be  remembered,  are  the  failures  of  Trade 
Unionism,  and  are  but  partially  redeemed  by  victory.  That  is 
to  say,  it  is  the  business  of  Trade  Union  organisation  to  secure 
reasonable  advantages  without  fighting,  and  its  real  success  lies 
in  this  direction. 


40  THE  LABOUR  MOVEMENT 

of  lo  per  cent,  and  lose  ;  but  the  stubbornness  of 
the  battle  may  stop  further  reductions,  which  would 
have  stripped  unorganised  workmen  of  20,  30,  or 
40  per  cent.  Both  sides  know  this,  and  hence  the 
seemingly  narrow  issues  on  which  long  and  stub- 
born disputes  are  often  fought. 

But  the  most  effective  Union  seldom  fights 
because  it  has  no  need  to  do  so.  It  is  by  the 
steady  pressure  of  organised  opinion,  by  the  deli- 
cate tact  of  skilled  negotiators,  by  the  quietly 
effective  ways  about  which  newspapers  are  silent, 
that  the  best  work  is  done.  But  when  we  take 
this  quiet  and  gradual  work  into  account,  no  one 
can  tell  by  any  comparison  of  figures  what  the 
effect  of  Unionism  on  wages  and  hours  has  been, 
because  no  one  knows  what  wages  and  hours  would 
have  been  to-day  but  for  the  Unions.  It  is  not 
enough  to  compare  the  state  of  non-Union  trades, 
for  they,  too,  have  benefited  indirectly  by  the 
organisation  of  the  others.^  The  standard  is  set 
by  the  combination  and  the  Union  men  do  the 
fighting  for  the  rest. 

Thus  the  test  of  direct  statistical  evidence  is 
very  difficult  to  apply.  There  are,  however,  certain 
very  simple  and  general  considerations  that  are 
worth  looking  at  as  showing  how  Trade  Unionism 
operates,  what  sort  of  help  it  gives  to  the  worker, 
and  what,  in  fine,   it  can  and  cannot  accomplish. 

The  isolated  worker,  in  bargaining  with  the 
employer,  is  almost  always  at  a  considerable 
disadvantage.  If  he  refuses  work  there  are  almost 
always  others  who  can  do  it.  He  cannot  afford 
to  wait,  for  he  has  no  reserve  to  fall  back  upon. 
He  is  much  in  the  same  case  as  a  tradesman  who 
is  forced  to  sell  and  cannot  bandy  words  with 
purchasers,  but  must  take  what  price  he  can 
get.       And    the    difficulty    has    more    force    the 


TRADE  UNIONS  41 

lower  we  go  in  the  scale.  The  poorer  the 
workman  is,  the  less  he  can  afford  to  wait, 
and  the  more  unskilled  his  occupation,  the 
greater  the  crowd  of  competitors  for  it.  Competi- 
tion, of  course,  may  be  the  other  way.  The 
"  worker  "  may  himself  be  sought  after.  There 
is  a  continuous  gradation  from  the  great  lawyer 
or  doctor  who  can  choose  his  own  fee,  and,  what- 
ever price  he  names,  will  be  beset  by  "  employers," 
down  through  the  mass  of  professional  men  and 
artisans  who  will  wait  a  bit  rather  than  take  a 
second-rate  place,  to  the  crowd  of  "  casuals  "  who 
throng  round  you  at  a  railway-station  to  carry  your 
bag  for  a  copper.  The  point  is,  that  the  farther 
we  descend  the  economic  scale  the  keener  the 
competition  and  the  worse  the  position  of  the 
worker  for  bargaining.  His  sole  resource  is  the 
Union.  The  Union  arrests  the  undercutting  pro- 
cess., It  provides  the  fund  which  enables  a  man 
to  wait  a  little  while  rather  than  allow  himself 
to  be  beaten  down  to  a  lower  price,  and  it  supplies 
officials  to  conduct  negotiations.,  On  this  point 
there  is  often  much  confusion  in  public  discussion. 
The  Union  officials  are  spoken  of  as  third  parties 
intervening  between  employers  and  employed.  In 
reality  they  are  agents,  and  in  no  other  relation 
of  life  is  the  employment  of  agents  questioned. 
If  a  man  has  a  house  to  buy  or  sell,  to  let  or 
to  take  on  lease,  he  probably  employs  a  solicitor 
or  an  agent,  unless,  indeed,  the  buying  or  letting 
is  part  of  his  regular  business.  Wherever  a  man 
has  no  special  skill  he  uses,  if  he  is  wise,  (the 
special  skill  of  others.  Now,  the  business  of  selling 
one's  work  to  the  best  advantage  is  a  very  different 
thing  from  the  business  of  doing  it  well,  as  many 
who  are  not  workmen  know.  But  the  workman 
has  to  live  by  selling  his  work.     He  cannot  sell  it 


42  THE  LABOUR  MOVEMENT 

advantageously  unless  he  comes  to  terms  with 
others  who  have  the  same  commodity  to  dispose  of. 
Nor  does  he  know  the  market.  Accordingly  he 
forms  a  union  that  all  sellers  of  labour  may  act 
in  concert,  and  chooses  as  officials  the  best  experts 
he  can  find,  appoints  them  to  watch  the  market 
for  him,  and  pays  them  for  their  advice  as  to  his 
dealings.  In  these  ways  the  labourer  puts  himself 
on  an  equality  with  his  employer,  the  employer 
being  already,  as  Professor  Marshall  has  pointed 
out,  an  absolutely  rigid  combination  to  the  extent 
of  the  number  of  workers  he  employs,  and  being 
also,  as  a  rule,  well  versed  in  the  condi- 
tions of  the  market  and  the  general  business  of 
bargaining. 

Now,  prima  facie,  we  should  assume  that  if  a 
man  is  a  good  bargainer  he  is  likely  to  be  better 
off  through  life  than  a  bad  one.  But  we  are  told 
by  economists  that  wages,  being  the  price  of 
labour,  will  tend  like  all  other  prices  to  an  equiU- 
brium  point.  This  point  is  fixed,  primarily  and  for 
short  periods,  by  two  things— («)  The  demand  for 
labour—/.^.,  the  amount  of  money  employers  are 
ready  to  spend  on  hiring  labour  ;  and  {b)  the 
supply—/.^.,  the  number  of  labourers  seeking  em- 
ployment at  the  price  employers  are  willing  to 
pay.  To  the  point  so  fixed  wages  will  always  be 
tending  slowly  or  quickly.  They  may  never  reach 
it  or  rest  at  it,  but  they  oscillate  about  it  as  a 
pendulum  swings  about  the  vertical  line.  Well, 
let  it  be  granted  that  in  any  market  prices  are  all 
tending  to  an  equilibrium.  That  will  not  alter  the 
fact  that  the  least  skilled  purchasers  in  that  market 
will  get  the  least  for  their  money,  and  if  there  is 
one  class  of  purchasers  less  skilled  on  the  average 
than  another,  that  class  on  an  average  will  come 
off  worse.  Prices  will,  if  you  please,  ultimately 
tend  to  the  equilibrium  point.     Meanwhile  the  in- 


TRADE   UNIONS  43 

ferior  marketers  will  have  bought  at  the  high  price, 
or  let  goods  go  at  the  lower.  Here  they  will 
hasten  to  purchase  when  they  might  have  waited 
for  a  fall.  There  they  will  sell  in  a  hurry  while 
the  market  is,  in  fact^  rising.  We  need  hardly 
labour  this  point.  No  one  will  deny  that  a  good 
housewife  makes  a  shilling  go  farther  than  a  bad 
one,  and  there  is  no  reason  to  reverse  the  judg- 
ment when  it  is  a  question  of  a  class  instead  of  an 
individual. 

Let    it    be    granted,    then,    that    wages    tend   of 
themselves  to  an  equilibrium,  and  let  it  be  for  the 
moment    supposed   that   no    deliberate   action   can 
affect  this   equilibrium,   still,  the  worker  who  can 
bargain    well    will    get    the    advantages    of    every 
turn  in  the  market.     It  takes  perhaps  years  for  an 
expansion    of    demand   for    labour    resulting   from 
some  new  commercial  development  to  work  itself 
out  unaided  on  the   rate  of  wages.     Let  us  con- 
cede   (we  shall  see  reason  subsequently  for  with- 
drawing   the    concession)    that    no    Trade    Union 
action  can  affect  the  rate  which  wages  will  arrive 
at  by  the  end  of  that  time.     Yet  meanwhile  the 
market  might  admit  all  along  of  the  higher  rate. 
The    pressure    of    tendency    will    not    make    itself 
felt   for   years   if   the   party  which   stands   to   win 
is  not  in  a  position  to  make  use  of  his  advantages. 
Take  a  parallel  case.     A  farmer's  wife  sells  her 
eggs   at    a   shilling   a   dozen    because   that   is   the 
price  this  morning  and  she  cannot  wait.     Another, 
shrewder,  more  patient,  or  less  pressed  for  cash, 
scents  a  coming  rise,  holds  back,  and  finally  sells 
the   dozen   for    I4d.      The   weak   bargainer   loses, 
and    if    there    is    a    class    of   weak    bargainers    it 
loses  as   a  class  and  all  along  the  line.     Thus  it: 
is  quite  intelligible  that  there  should  be  sufficient 
"  buoyancy  "  in  the  labour  market  to  admit  of  a 


44  THE  LABOUR  MOVEMENT 

rise  years   before  it  takes  place  if  the  labourers 
are  neither  strong  nor  far-sighted.     Now,  if  there 
were   any   tendency   in   bargaining   to   right   itself 
this   would   not   much   matter.      If   the    very   fact 
that  I  am  underpaid  to-day  set  some  law  of  justice 
or  economic  harmony  into  operation  which  would 
overpay   me    to-morrow,   we   should  cry   quits   all 
round  and  leave  the  market  to  take  care  of  itself. 
But    since    such    harmonies    figure    only    in    the 
mythology  of   early  nineteenth-century  science,  it 
will   be   readily  seen   that   to   be  permanently  the 
weaker   in   a   series   of   bargains   is    likely  to   im- 
poverish you   in  the   long  run.     If  then,  a  Trade 
Union  could  do  no  more  than  merely  "  anticipate 
a  rise,   or   delay  a   fall,"   and   if  it  did  this   per- 
manently  and   continually   its   existence   would   be 
abundantly  justified— its  effect  on  the  average  rate 
of  wages  would  be  a  very  real  one.     And  there  is 
no  need,  we  may  remark,  to  suppose  that  the  Union 
gets   the    better  of  the  bargain,  or  that   it  makes 
"  economic    friction  "    work    on    the    side    of    the 
employed   against   the   employer.      We   need   not, 
that   is   to   say,   suppose  that   by  combination   the 
worker   will    get   a    larger   share    of   the   produce 
than  he  would  as  an  isolated  worker  who  should 
be    on    perfectly    equal    terms,    as    to    acuteness, 
power  of  waiting,  and  the  like,  with  his  employer. 
Nor  need  we  therefore  hold  that  the  rate  of  profit 
would  be    lower  than   it   would   be   under   such  a 
system   of    perfectly   free   and   equal   competition. 
It   is    quite  enough   for  the   Union   to   prove   that 
it   raises   wages   to   the   point   obtainable   by   such 
competition  between  equals.     The  fact  is  that  the 
Trade   Union   suppresses   free   competition   in   one 
sense,  but  institutes  it  for  the  first  time  in  another. 
It  abolishes  the  unrestricted  competition  of  isolated 
individuals  against   one  another  which  places  all 


TRADE   UNIONS  45 

at  the  mercy  of  the  employer,  and  substitutes  for 
it  a  combination  of  men  bargaining  for  employment 
on  free  and  equal  terms. 

So  far  we  have  dealt  only  with  the  effect  of  com- 
bination on  the  temporary  fluctuations  of  the 
Labour  Market.  Considering  the  Union  as  the  only 
efi'ective  mechanism  of  bargaining  available  for 
the  labourer,  we  have  seen  that  it  enables  him 
to  take  advantage  of  the  various  fluctuations  of 
demand  instead  of  allowing  these  to  take  advantage 
of  him.  Unionism  finds  the  Labour  World  in  the 
state  analogous  to  that  of  a  market  where  skilful 
dealers  are  selling  to  ignorant  customers  at  enor- 
mous profits.  And  just  as  such  a  market  is 
revolutionised  when  the  customers  become  educated 
and  acquire  knowledge  of  goods  and  their  prices, 
so  the  old  methods  of  selling  the  commodity  of 
labour  are  all  upset  by  combination. 

In  all  this  we  have  assumed  with  the  economists 
that  there  is  a  normal  price  to  which  wages  tend 
to  return,  however  violently  they  may  be  raised 
or  lowered  for  a  time,  and  that  the  Union  can  have 
no  influence  in  fixing  that  price.  But  the  assump- 
tion is  not  accurate  because  Labour,  though  a 
marketable  commodity,  is  not  quite  like  other 
marketable  commodities.  If  the  price  of  coal 
falls  and  I  get  them  2s.  or  3s.  a  ton  cheaper, 
the  coals  are  just  as  good  as  they  were  before 
and  perform  their  function  just  as  well.  But  if 
wages  fall,  say,  in  an  agricultural  district,  from 
I2S.  to  I  OS.  per  week,  the  labourer  does  not  do  his 
work  so  well.  The  labourer's  capacity  for  work — an 
economic  factor  of  the  first  importance  on  which  the 
present  commercial  position  of  the  nations  of  the 
world  may  be  truly  said  to  rest— varies  directly  up 
to  a  certain  maximum  with  the  remuneration  of  his 
work.      Send   a   man   out   underfed   and   scantily 


46  THE   LABOUR  MOVEMENT 

clothed  to  his  wintry  toil  in  the  frozen  farmyard, 
and  bid  him  return  at  night  to  an  unwholesome, 
dirty,  draughty  cottage,  and  as  the  months  go 
by  his  mental  and  physical  strength  is  drained. 
He  becomes  spoiled  goods,  and  at  last  has  to 
be  thrown  away — into  the  workhouse.  Meanwhile 
his  children  are  growing  up  under  similar  con- 
ditions, kept  mercilessly  alive  for  a  battle  they 
are  not  fit  to  fight. 

When  we  get  below  the  minimum  of  comfort 
the  price  of  labour  has  an  immediate  and  cumu- 
lative eft'ect  upon  its  efficiency.  The  farther  we  go 
below  the  minimum  the  more  important  is  this 
effect — until  we  reach  starvation  point.  Hence  it 
is  clear  that  anything  which  affects  the  reward 
of  Labour  for  a  short  period  tends  to  affect  its 
efficiency  beyond  that  period.  And  the  "  short 
period  "  may  be  very  short.  If  I  take  a  half- 
starved  tramp  off  the  road  and  put  him  to  work  in 
my  garden,  in  return  for  food,  clothes,  and  shelter, 
for  a  week,  I  shall  lose  on  the  transaction.  If 
I  keep  him  a  second  week,  he  may  be  capable  of 
twice  as  much  work,  and  I  may  be  the  gainer. 
This  is  an  extreme  case.  But  on  a  wider  scale, 
with  more  far-reaching  effects,  though  in  a  lesser 
degree,  every  increase  in  wages  that  are  still  below 
the  minimum  of  comfort  tends  in  the  same 
direction.  Now  it  is  easy  to  understand  that  the 
efficiency  of  Labour  reacts  on  wages  ;  for  it  in- 
creases the  total  produce  of  the  country,  and  with 
it,  though  in  a  lesser  degree,  the  share  that  falls 
to    the    labourer.'       Granting,    then,    that    Trade 

'  The  total  product  is  divided  between  Labour  and  other 
factors  in  production  in  a  proportion  that  depends  upon  their 
relative  strength.  The  increase  of  the  total  does  not  necessarily 
involve  any  change  in  this  proportion  and  unless  it  does  so  each 
share  will  be  increased. 


TRADE   UNIONS  47 

Unionism  raises  the  price  of  Labour  for  short 
periods  by  enabHng  it  to  take  advantage  of  every 
turn  of  the  market,  it  follows  that  it  tends  to 
make  a  permanent  improvement  in  the  condition 
of  the  labourer  by  the  best  of  all  methods,  the 
improvement  of  the  labourer  himself. 

These    considerations    help    us    in    dealing   with 
a    question    which    must    have    been    present    to 
the  reader's  mind  from  the  first,  What  is  the  effect 
of  a  rise  in  wages  upon  profits?     This  question  is 
forced  upon  us,  not  only  by  general  economic  con- 
siderations,  but   by  the   patent  fact  that  in  many 
of  the  worst  paid  trades  the  employers,  or  some  of 
them,   find   it   difficult  to   keep   their  heads   above 
water  ;    and  in  some  of  the  most  sweated  trades 
the  employer  is  said  to  be  absolutely  worse  off  than 
his  half-starved  underling.     At  first  sight  this  is  a 
paradox.     If  in  the  Labour  market,  and  especially 
in  the  unskilled  Labour  market,  the  advantage  in 
bargaining    is    almost   without    exception    on    one 
side,   profits  should  be  high,   and  they  should   be 
highest  where  wages  are  lowest.     As  it  turns  out 
the   case    is   often   the   other   way.      The   general 
discussion    of    this    question    is    a   matter    for    the 
political  economist.     It  concerns  us  at  present  only 
as  raising  the  question  how  the  employer  can  afford 
to  raise  wages.     Must  not  profits  suffer,  and  will 
not  Capital  leave  the  country? 

An  increase  of  wages  acts  upon  profits  mainly  by 
affecting  the  cost  of  producing  goods  for  the  market. 
But  how  an  increase  of  wages  will  affect  cost  in  any 
case,  and  how  a  change  in  cost  of  production  will 
affect  profits,  is  very  uncertain.  But  that  there 
may  be  cases  in  which  the  increased  cost  of  manual 
labour  does  raise  the  price  at  which  a  commodity 
can  be  sold  with  profit  it  would  be  hard  to  deny. 
If  we  are  to  believe  the  reports  of  many  of  our 


48  THE  LABOUR  MOVEMENT 

principal  railway  companies,  the  "  agitator  "  '  has  by 
this  means  largely  increased  net  expenses  of  many 
of  them  in  the  last  few  years  .2  Supposing  cost  of 
production  to  be  thus  increased,  what  will  happen? 
It  is  held  by  some  economists  that  the  process 
will  be  self-defeating.  Capital  will  leave  the 
country  and  wages  will  fall.  That  this  may  be  the 
result  in  extreme  cases,  and  even  has  been  the 
result  in  some  instances,  it  would  be  rash  to  deny  ; 
though  we  may  remark,  following  good  authority, 
that  it  has  more  probably  come  about,  if  at  all, 
from  injudicious  disputes  than  from  simple  increase 
of  cost. 

Further,  if  capital  does  not  leave  the  country, 
foreign  goods  enter  it,  and  how,  asks  the  employer, 
is  he  to  pay  30s.  a  week  and  hold  his  own  with 
the  German,  who  only  pays  25s.?  This  argument 
meets  with  the  especial  approval  of  the  Tariff 
Reformer,  who  has  his  ready  specific  to  meet  the 
case.  Keep  out  foreign  goods  or  compel  them  to 
pay  a  duty,  and  it  at  once  becomes  possible  for 
the  British  manufacturer  to  raise  prices  to  the 
extent  of  the  duty  and  wages  in  proportion.  The 
Tariff  Reformer's  argument  would  be  more  im- 
pressive if  he  did  not  in  the  same  breath  assure 
us  that  prices  will  not  be  raised  by  a  tariff.  ^  But 
this  belongs  to  the  humorous  side  of  political 
controversy.  For  serious  purposes  we  may  assume 
that  a  tariff  would  raise  prices  in  rough  propor- 
tion to  the  amount  of  the  duty  in  each  case,  and 
we  may  ask  whether  in  effect  this  would  help  us. 
We  are  to  raise  prices  in  order  that  we  may  raise 

»  The  "agitator"  is  not  infrequently  attacked  almost  in  the 
same  breath  (a)  for  ruining  the  employer  by  causing  him  to  pay 
higher  wages,  and  (b)  for  humbugging  the  workman  into  thinking 
that  he  can  get  wages  raised.  But  this  must  be  one  of  the 
"  inner  contradictions  "  of  Capital  spoken  of  by  Karl  Marx. 

-  Written  in  1892  and  requiring  little  modification  in  1912. 


TRADE  UNIONS  49 

wages  above  the  foreign  level.  Now  at  this  point 
again  we  come  upon  a  familiar  contradiction  in  the 
Protectionist  case  which  on  the  surface  is  merely 
funny,  but  has  a  deeper  suggestiveness.  For  it 
assures  us  at  one  and  the  same  moment  (a)  that 
we  must  protect  ourselves  against  the  competition 
of  the  underpaid  workman  of  the  Protectionist 
lands,  and  (b)  that  we  must  imitate  the  policy  of 
Protection  for  the  sake  of  the  advantages  which 
it  confers  on  the  workman.  Now  the  fact  that 
lies  behind  this  contradiction  is  that  it  is  not  the 
underpayment  of  the  workman  which  enables  the 
foreign  producer  to  compete  with  us  successfully. 
A  country  will  beat  us  in  competition  where  she 
has  natural  or  acquired  advantages,  such  advan- 
tages, for  instance,  as  the  chemical  schools  or  the 
highly-developed  commercial  technique  of  Ger- 
many. But  she  will  not  as  a  rule  beat  us  by 
underpaying  her  workmen,  because  it  has  been 
repeatedly  shown  by  careful  comparisons  that  a 
firm  may  employ  its  men  for  shorter  hours,  and 
pay  them  more  per  day,  and  yet  turn  out  its  goods 
at  something  less  per  piece  than  its  competitors. 
This  is  due  to  a  combination  of  causes.  The 
better-paid  workman  is  more  efficient,  produces 
more,  and  destroys  or  hinders  less.  The  man  who 
sets  out  to  organise  his  workshop  with  good  and 
well-paid  workers  is  a  better  manager.  The 
efficiency  and  the  very  expensiveness  of  labour 
impose  higher  organisation.  The  weaker  em- 
ployers go  under.  The  stronger  brains  concen- 
trate the  business  more  in  their  own  hands.  Pro- 
duction passes  into  the  larger  scale.  The  whole 
level  of  competence  is  raised.  The  process  has  its 
bad  as  well  as  its  good  side.  There  is  in  it 
some  of  the  ruthlessness  inherent  in  competition, 
and  we   shall  perhaps  see   a   glimpse   later  of   a 

4 


50  THE  LABOUR  MOVEMENT 

more  excellent  way.  For  the  present  we  have 
to  note  that  it  is  in  fact  by  this  all-round  reaction 
on  efficiency  that  increase  of  remuneration  is 
possible  under  existing  economic  conditions.  Were 
there  no  such  reaction,  high  wages  would  mean 
loss  and  there  would  be  no  advance,  unless  in, 
some  favoured  industry  where  profits  are  ruling 
so  high  that  employers  could  incur  increased 
expense    without    curtailing    output. 

But  would  it  not  in  any  case  be  possible  to 
protect  the  home  market  by  a  tariff  and  so  avoid 
the  difficulties  of  foreign  competition,  whether  due 
to  well  or  ill-paid  labour?  It  would,  of  course,  be 
possible  to  benefit  any  single  trade  by  a  tariff, 
but  not  trade  as  a  whole.  Our  total  production 
is  partly  for  our  own  and  partly  for  the  foreign 
market,  and  what  we  send  abroad  is  paid  for  by 
goods  sent  to  us.  If  we  succeed  in  stopping  the 
entry  of  foreign  goods  to  the  amount  of  ten  million 
pounds,  we  stop  the  export  of  our  own  goods  to 
an  equivalent  value. '     Nor  is  this  all.     Under  the 

'  This  would  be  clearer  to  the  general  public  if  exports  and 
imports  were  evenly  balanced.  As  it  is  what  we  import  pays 
for  our  shipping,  for  a  good  deal  of  banking  and  insurance  work 
done  for  foreign  account,  and  interest  on  capital  invested  abroad. 
It  is  not  therefore  true  to  say  that  every  piece  of  goods  imported 
is  paid  for  by  a  corresponding  export,  but  it  is  true  that,  with  the 
exception  of  that  which  is  imported  as  payment  of  interest,  all 
imports  are  paid  for  by  British  industry.  If  a  tariff  were  imposed 
and  succeeded  in  diminishing  total  imports,  foreign  investors 
would  still  require  their  interest,  and  the  fall  would  accordingly 
affect  that  portion  of  our  imports  which  is  paid  for  by  exports  or 
other  forms  of  industry.  Every  such  reduction  of  the  import 
trade  would  therefore  involve  an  equal  curtailment  of  British 
industry. 

It  may  be  objected  that  this  argument  takes  no  account  of  the 
existence  of  unemployed  capital  and  labour.  Suppose  the 
importation  of  foreign  motor-cars  were  diminished  by  a  duty, 
this  capital  and  labour  might  be  applied  to  making  them.  But 
foreign  and  protected  countries  also  have  unemployed  capital 
and  labour,  and  the  supposed  check  to  their  export  trade  would 


TRADE  UNIONS  51 

actual  conditions  of  our  trade  the  main  effect  of 
a  tariff  on  imported  goods  would  be  either  to 
increase  the  cost  of  production  or  to  diminish  the 
real  wages  of  labour  or  both  combined.  For 
roughly  nine-tenths  of  our  imports  consist  of  food 
and  foodstuffs,  or  materials  and  appliances  for 
use  in  industry.  The  Board  of  Trade  divides 
imports  of  manufactured  and  partly  manufactured 
goods  into  three  classes,  which  it  distinguishes 
as  follows  : — 

Class  A — Articles  completely    manufactured  and    ready    for 

consumption. 
Class  B — Articles  manufactured  but  requiring  to  pass  through 

some  process  of  adaptation  or  combination  before 

entering  into  consumption. 
Class  C — Articles  partly  manufactured. 

Apart  from  Class  A,  everything  that  we  import 
is  either  a  foodstuff  or  some  material  or  appliance 
used  in  production.'  But  the  net  imports  under 
Class  A  amounted  in  1908  to  44'8  million 
pounds  out  of  a  total  of  513  million  pounds.  For 
the  four  years  1905-8  Class  A  imports  averaged 
49*2  million  pounds  out  of  a  total  of  519  million 
pounds. 2  The  remaining  nine-tenths  of  our  im- 
ports are  either  foodstuffs  or  materials  and  appli- 
ances of  industry.  Hence,  even  if  it  did  not 
directly  diminish  our  production  by  interfering 
with  the  exchange  of  goods,  a  general  tariff  would 
increase  the   cost  of  production  and  make  it  not 

add  to  it.  If  the  productive  power  thus  displaced  could  not  find  a 
market  abroad,  it  would  be  induced  to  find  one  at  home.  Home 
demands  would  be  increasingly  met  by  home  production,  and 
the  demand  for  British  goods  proportionately  reduced, 

'  The  same  is  in  reality  true  of  many  of  the  objects  included 
in  Class  A  itself,  since  though  fully  manufactured  they  are  of  use 
only  as  subserving  some  further  industrial  process. 

=  "  British  and  Foreign  Trade  and  Industry,  1909"  (Cd.  4954) 
pp.  19  and  49. 


52  THE   LABOUR  MOVEMENT 

less  but  more  difficult  to  raise  the  standard  of  real 
wages.  To  avoid  this  objection  it  would  be  neces- 
sary to  confine  the  tariff  to  the  small  class  of 
fully  manufactured  goods,  an  impossible  piece  of 
favouritism  and  one  that  could  have  no  general 
effect  on  the  level  of  wages. 

The  protection  of  a  tariff  is  therefore  illusory. 
The  practical  possibility  of  raising  wages  and 
maintaining  them  at  a  high  level  must  depend  on 
the  response  of  the  workman  and  his  employer  to 
the  improvement.  Experience  has  amply  shown 
that  high  wages  and  good  conditions  may  also 
be  merely  from  the  point  of  view  of  production  the 
most  economical.  But  this  depends  on  the  increase 
of  product  being  at  least  proportionate  to  the  in- 
crease of  wages.  Suppose  that  a  man  receiving 
2 OS.  a  week  produces  on  the  average  a  value  of 
30s.,  the  margin  going  to  the  other  expenses  of 
the  industry.  Suppose  that  all  these  expenses  re- 
main the  same,  but  that  his  wages  are  raised  to 
25s.  It  is  clear  that  his  week's  work  must  now 
be  worth  at  least  35s.  unless  the  cost  of  production 
is  to  increase.  In  reality  it  must  be  worth  more, 
for  the  increase  will  imply  some  improvement  of 
organisation  and  some  further  outlay  of  capital. 
But  let  us  take  the  figure  at  35s.  At  this  figure 
it  will  still  be  possible  for  the  low-grade  works 
employing  low-grade  labour  at  the  old  rate  of 
20S.  to  compete  with  the  firms  which  pay  the 
higher  wage,  while  if  the  product  is  anything  less 
than  35s.  the  low-grade  firms  will  win  in  the 
competition.  There  will  be  a  tendency  to  revert 
to  their  methods.  It  is  here  that  the  real  danger 
of  low-grade  foreign  labour  comes  in.  The  effect 
is  psychological.  The  employing  class  point  to 
cheap  goods  made  by  cheap  foreign  labour  and 
ask  how  they  can  possibly  compete  with  them  if 


TRADE   UNIONS  53 

they  are  to  increase  the  margin  of  superiority 
already  enjoyed  by  the  British  workman.  The 
workman  himself  feels  the  sting  of  the  question, 
and  responds  by  asserting  his  solidarity  with  the 
foreign  Trade  Unionist  and  not  seldom  by  furnish- 
ing him  with  direct  material  support,  I  have 
never  learnt  that  employers  on  their  side  have 
drawn  this  very  natural  deduction  from  their 
premises. 

I  conclude  that  the  raising  of  wages  is  not  a 
self-defeating  process,  though  it  is  not  free  from 
practical  difficulties.  The  most  serious  of  these 
difficulties  is  that  the  full  economic  profit  of  high 
wages  is  not  immediate.  A  given  individual  is 
not  immediately  able  to  produce  twice  as  much 
because  his  wages  are  suddenly  doubled.  The 
full  effect  will  not  be  felt  for  a  generation.  An 
ill-paid  workman  has  ill-fed  and  ill-educated 
children,  and  is  the  correlative  of  a  driving  and 
oppressive  employer.  The  full  effects  of  an  im- 
provement in  his  conditions  are  many-sided  and 
gradual.  They  will ^ come  out  partly  in  his  own 
lifetime,  more  fully  in  that  of  his  children.  They 
will  appear  partly  in  the  improvement  in  his  own 
work,  partly  in  the  improvement  of  methods  of 
business  management,  and  in  an  actual  change  in 
the  character  of  employers.  The  prevention  of 
underpayment  eliminates  from  the  ranks  of  em- 
ployers the  men  who,  whether  from  incompetence 
or  from  other  defects,  are  only  able  to  keep  their 
heads  above  water  by  employing  low-grade  labour 
at  an  inadequate  rate  of  wages. 

The  indirect  value  of  Trade  Unionism  to  indus- 
trial production  as  a  whole  is  now  very  commonly 
recognised  by  the  most  enlightened  employers,  and 
I  gladly  reproduce  a  passage  quoted  in  the  first 


54  THE  LABOUR  MOVEMENT 

edition  of  this  book  from  an  article  by  Mr.  (now 
Sir  .William)  Mather  as  expressing  opinions  rarer 
then  than  now. 

"  We  employers  owe  more  than,  as  a  body,  we  are  inclined  to 
admit  to  the  improvements  in  our  methods  of  manufacture,  due 
to  the  firmness  and  independence  of  trade  combinations.  Our 
industrial  steadiness  and  enterprise  are  the  envy  of  the  world. 
The  energy  and  pertinacity  of  Trade  Unions  have  caused  Acts  of 
Parliament  to  be  passed  which  would  not  otherwise  have  been 
promoted  by  employers  or  politicians,  all  of  wliich  have  tended 
to  improve  British  commerce.  And  it  is  worthy  of  note  that  this 
improvement  has  gone  on  concurrently  with  great  and  growing 
competition  of  other  nations,  owing  to  tlie  development  of  their 
own  resources.  The  enormous  production  of  wealth  in  Great 
Britain  during  the  present  half-century,  which  is  due  to  natural 
resources  and  the  labour  and  skill  bestowed  upon  their  develop- 
ment, has  grown  most  rapidly  during  a  period  remarkable  for 
the  extension  of  the  power  of  Trade  Unionism.  Prosperity 
beyond  the  dreams  of  avarice  has  followed  in  the  wake  of  our 
industrial  habits  and  customs,  and  these  have  undoubtedly  been 
largely  promoted  by  the  great  labour  organisations.  .  .  .  Every 
intelligent  employer  will  admit  that  his  factory  or  workshop,  when 
equipped  with  all  the  comforts  and  conveniences  and  protective 
appliances  prescribed  by  Parliament  for  the  benefit  and  protection 
of  his  workpeople — though  great  effort,  and,  it  may  be,  even 
sacrifice,  on  his  part  has  been  made  to  procure  them — has 
become  a  more  valuable  property  in  every  sense  of  the  word,  and 
a  profit  has  accrued  to  him  owing  to  the  improved  conditions 
under  which  his  workpeople  have  produced.  ..."  And  speaking 
of  the  importance  of  permanence  and  stability  in  a  trade,  he 
adds  :  "  The  keen  interest  they  feel  in  seeking  to  secure 
permanence  and  progress  in  the  trade  they  pursue  has  been 
strikingly  shown  by  the  fact  that  Trade  Unions  have  agreed  to 
reductions  of  wages,  advocated  short  time,  and  offered  many 
suggestions  involving  sacrifice  on  the  part  of  the  workers,  in 
order  to  stem  the  tide  of  temporary  adversity." ' 

So  far  we  have  studied  Trade  Unionism  as  it 
actually  works.  We  have  seen  that  it  regulates 
the  conditions  of  employment  in  the  interests  of 
all  the  workers.     It  puts  the  manual  labourer  on 

'  Article    on    "  Labour  and  the   Hours  of   Labour,"   in  the 
Contemporary  Review  for  November,  1892. 


TRADE   UNIONS  55 

an  equality  with  his  employer  in  arranging  terms, 
and  accordingly  it  raises  wages  and  diminishes 
hours  of  work.  It  effects  general  economy  by 
eliminating  incapable  employers,  and  by  raising 
the  standard  of  comfort  among  workmen  it  is  not 
only  a  direct  benefit  to  them,  but,  by  making  them 
more  efficient  agents  in  production,  promotes  the 
general  health  of  the  national  industry. 

If  now  we  ask  what  hope  there  is  that  Trade 
Unionism  may  succeed  in  establishing  fair  con- 
ditions as  above  defined  for  all  workers,  we  shall 
recognise  a  far  greater  obstacle  in  the  weakness 
of  Trade  Unions  than  in  any  defect  in  the  nature  of 
collective  bargaining  or  in  the  principle  of  the  fair 
wage.  The  competition  of  non -Union  men,  and  the 
mistaken  policy  and  narrow  interests  of  some  of  the 
Unions  themselves,  keep  the  movement  back  far 
more  than  any  inherent  weakness  in  the  principle 
of  Unionism.  These  obstacles  are,  however,  being 
in  part  overcome  by  the  spread  of  moral  and 
economic  education  among  workmen,  and  by  the 
consolidation  and  federation  of  Unions.  The 
federal  principle  has  the  special  merit  of  over- 
coming sectional  antagonisms  and  the  tendency  to 
a  narrow  corporate  spirit.'  The  larger  Unions 
are  in  a  position  to  choose  abler  men  to  administer 
their  affairs.  They  are  not  wont  to  precipitate 
expensive  disputes,  and  they  command  the  respect 
which  is  necessary  as  a  basis  of  negotiation  ;  and 
as  different  trades  act  together  it  becomes  increas- 
ingly difficult  to  deal  with  them  by  bringing  in  out- 
side labour  instead  of  by  an  open  and  honourable 
discussion  of  difficulties.     The  first  step,  then,  for 

*  On  some  of  the  drawbacks  of  these  extensions,  and  on 
the  danger  that  a  Trade  Union  may  acquire  the  power  of  a 
monopoly  as  against  the  pubhc  in  certain  industries  a  few  words 
will  be  said  in  Chap.  III. 


56  THE   LABOUR  MOVEMENT 

Trade  Unionism  is  to  extend  and  perfect  itself  as 
a  moral,  educational,  and  economic  movement. 

The  forces  which  it  sets  working  will  help  it 
whenever  wages  are  below  the  minimum  on  which 
the  worker  can  best  develop  his  powers.  I  mean 
the  economic  advantages  already  explained  of  rais- 
ing wages  to  this  minimum.  If  the  Unions  were 
fighting  against  a  continual  and  ever-increasing 
economic  pressure,  one  might  doubt  the  perman- 
ence of  their  success.  But  to  a  certain  point  their 
work  gets  easier  as  it  goes  on.  The  second 
advance  may  be  more  easily  won  than  the  first. 
This  holds  as  long  as  wages  remain  below  the 
minimum.  Up  to  that  point  as  a  rule  a  rise  of 
wages  really  pays  in  the  long  run. 

Lastly,  we  have  been  assuming  all  along  that 
the  Union  has  to  fight  the  employers  and  the  public 
at  every  step.  This  would  once  have  been  practi- 
cally true,  but  it  is  true  no  longer.  Even  as 
regards  private  concerns  the  education  both  of 
Unionists  and  of  their  employers  has  improved  of 
late  years,  and  the  employer  has  come  to  see 
that  it  "  pays  "  in  the  end,  not  only  from  the 
humanitarian  but  from  the  business  point  of  view, 
to  employ  Union  men  on  Union  conditions.  Still 
more  fundamental  is  the  change  in  public  feeling. 
The  growing  inclination  of  public  bodies  and  Co- 
operative Societies  to  pay  Union  rates  marks  a 
new  era  in  the  history  of  Unionism.  It  is  the 
beginning  of  a  definite  system  of  fixing  wages  by 
the  moral  sense  of  the  community.  The  rate  on 
which  the  Unions,  the  ratepayers,  and  the  best 
employers  agree  has  moral  as  well  as  economic 
forces  at  its  back,  v/hich  the  inferior  employer 
cannot  long  resist.  As  to  the  justice  and  desira- 
bility of  supporting  the  "  living  "  wage  no  one 
who    holds    the    diffusion    of    the    means    of    the 


TRADE   UNIONS  57 

elementary  comforts  to  be  the  first  object  of  an 
industrial  system  can  have  any  possible  doubt.  On 
the  other  hand,  Trade  Unionism  is  weakest  just 
where  the  need  for  its  work  is  most  urgent.  The 
worst  paid  workers  have  not  the  reserve  of  force 
necessary  for  building  up  a  stable  combination, 
and  though  the  past  year  has  seen  a  revival  of 
combination  among  ill-paid  and  unskilled  workers, 
it  is  not  possible  to  write  as  hopefully  of  the  per- 
manent prospects  of  unassisted  Trade  Unionism  in 
this  direction  as  it  was  twenty  years  ago,  when 
the  "  New  Unionism  "  of  that  day  was  in  the  full 
vigour  of  its  youth.  Fortunatel}^,  in  the  interval 
the  sense  of  public  responsibility  for  the  condition 
of  the  workers  has  developed,  and  we  have  now 
legislative  recognition  of  the  principle  of  the  mini- 
mum wage.  Wages  Boards  with  statutory  powers 
define  wages  in  four  of  the  most  sweated  industries, 
and  have  already  raised  them  in  at  least  one  case 
in  drastic  measure.  The  working  of  these  Boards 
will  be  carefully  watched,  and  if  they  succeed  there 
will  doubtless  be  a  steady  demand  for  their  exten- 
sion. It  is  not  beyond  the  bounds  of  hope  that 
the  minimum  wage  may  become  as  much  a  matter 
of  the  general  law  as  the  limitation  of  hours  in 
the  factory.  On  the  other  hand,  the  law  only  pre- 
scribes minimum  conditions  in  any  trade.  The 
maintenance  of  a  higher  standard  and  the  general 
provision  for  the  fair  treatment  of  the  individual 
worker  will  remain  the  peculiar  function  of  the 
workers'  organisations.  We  are  likely,  therefore, 
to  see  the  extension  of  the  legal  minimum  accom- 
panied by  an  increase  rather  than  a  diminution  of 
Trade  Union  activity. 

Thus  in  securing  the  fair  wage  the  Trade  Union 
and  the  democratic  State  must  work  together.  But 
the  fair  wage  is  only  one  of  the  objects  of  industrial 


58  THE   LABOUR  MOVEMENT 

organisation.  We  have  said  nothing  as  yet  of  the 
general  direction  of  production.  We  have  said 
nothing  of  regularity  and  continuity  of  employ- 
ment. Though  we  have  had  to  touch  on  the 
support  of  the  infirm  and  the  incompetent,  we  have 
said  nothing  of  the  sources  out  of  which  they  are 
to  be  maintained.  These  questions  take  us  outside 
the  province  of  such  control  of  industry  as  can  be 
exercised  by  combinations  of  wage-earners  or  by 
the  State  acting  in  the  interest  of  wage-earners 
as  such.  They  raise  two  distinct  but  related  ques- 
tions. One  concerns  the  general  direction  of 
industrial  activity,  the  other  the  disposal  of  the 
surplus  that  remains  over  when  the  worker  has 
received  his  fair  wage.  These  questions  direct  our 
attention  to  other  forms  of  the  collective  control 
of  industry  to  which  we  must  now  turn. 


CHAPTER    III 

CO-OPERATION  AND  THE  CONTROL  OF  PRODUCTION 

If  Trade  Unionism  represents  the  control  of  in- 
dustry by  communities  of  workers  in  the  interest 
of  all  as  workers,  Co-operation  is  the  system  by 
which  production  may  be  organised  wholly  or  in 
part  in  the  interest  of  the  community  as  con- 
sumers. Let  us  ask,  then,  what  Co-operation  is 
doing,  and  can  do,  in  the  way  of  regulating  pro- 
duction and  making  a  fair  distribution  of  surplus 
wealth. 

In  ordinary  usage  Co-operation  is  the  name  of 
a  movement  instituted  and  maintained  by  volun- 
tary associations.  We  shall  see  reason  presently 
for  a  more  extended  usage.  But  let  us  first  con- 
sider the  growth  and  the  value  of  the  Co-operative 
movement  in  the  usual  sense.  W^  have  not  here 
to  tell  again  the  twice-told  tale,  but  merely  to 
recall  half  a  dozen  figures  to  show  that  whatever 
be  the  precise  economic  value  of  Co-operation, 
it  is  a  great  and  growing  power  to  be  reckoned 
with,  and  that  whatever  it  can  do  it  probably  will 
do  on  an  ever-increasing  scale. 

Not  to  go  back  to  the  days  of  infancy,  there 
were,  in  1862,  440  Co-operative  Societies  known 
to  exist  in  England  and  Wales,  with  a  membership 
of  90,341  persons.  Their  sales  in  that  year 
amounted  in  round  numbers  to  £2,330,000.     They 

made  a  profit  of  about  £165,500.     In  1890  there 

59 


60  THE   LABOUR  MOVEMENT 

were  about  1,303  Societies  existing  in  England 
and  Wales,  of  which  1,092  made  returns  published 
in  the  Report  of  the  Co-operative  Union.  These 
1,092  Societies  had  a  membership  of  883,000,  and 
sold  goods  to  the  amount  of  £33,000,000  during 
the  year,  with  a  net  profit  of  £3,200,000.  In 
addition,  there  were  333  Societies  in  Scotland, 
with  a  membership  of  171,000,  bringing  the  total 
membership  of  the  Co-operative  State  to  some- 
thing considerably  over  a  million  persons. ' 

In  1 910  there  were  1,555  Societies  making 
returns,  including  25  in  Ireland  (291  in  Scot- 
land 2).  Of  these  1,428  were  Retail  Distributive 
Societies,  which  had  2,542,532  members,  and  sold 
goods  to  the  value  of  £71,861,383,  with  a  net 
profit  of  £10,938,331.  Thus  in  a  generation 
before  1890  the  Co-operative  population  increased 
nearly  tenfold,  the  business  nearly  fifteenfold,  and 
the  profits  twentyfold.  In  the  twenty  years  since 
1890  the  population  has  again  more  than  doul^led, 
while  the  business  and  profits  show  a  corresponding 
increase. 

We  have  now  to  ask.  What  is  this  great  move- 
ment doing  for  the  interests  we  have  at  heart? 
What  is  the  economic  significance  of  Co-operation? 
In  most  industries  at  the  present  day  the  produc- 
tion of  any  article  is  left  to  any  one  who  chooses  to 
undertake  it.  A  man  makes  soap,  or  cotton,  or 
clothes,  not  because  he  wants  to  use  all  that  he 
turns  out  from  his  mill  or  workshop  himself,  nor 
necessarily  because  some  one  else  who  is  going  to 
use  them  has  ordered  them,  but  because  he  guesses 
or  calculates  from  the  general  state  of  the  market 

•  See  the  "  Report  of  the  Twenty-fourth  Annual  Co-operative 
Congress,  1892,"  p.  136. 

^  The  number  of  Scottish  Societies  has  decreased  since  1892, 
but  the  membership  has  risen  from  the  figure  given  above  to 
409,522.     See  the  43rd  Report  of  the  Co-operative  Union  (191 1). 


CO-OPERATION  61 

that  some  one  or  other  will  buy  what  he  makes. 
The  case  is  not  much  altered  when  the  actual 
manufacturer  produces  for  a  middleman.  The 
middleman  is  not  a  consumer,  but  an  agent  in 
production,  and  when  the  speculation  and  the  risk 
are  not  undertaken  by  the  maker  of  goods,  they  are 
merely  handed  over  to  the  merchant,  whether  he  be 
the  large  wholesale  dealer  or  finally  the  shop- 
keeper. The  modern  system  of  commerce,  then., 
will  not  be  greatly  misrepresented  if  we  figure  it 
as  being  carried  on  between  two  individuals,  A 
and  B,  in  such  a  way  that  A,  without  consulting 
B,  guesses  at  what  B  will  want,  and  spends  much 
labour  in  making  it,  B  meanwhile  doing  the  like 
for  A.  The  natural  consequence  is  that  when  A 
and  B  come  together  to  exchange  their  goods  they 
do  not  find  themselves  altogether  suited.  For 
example,  instead  of  A  making  hats  for  both,  while 
B  made  boots,  it  may  have  occurred  to  each  of 
them  to  make  hats.  The  result  is  that  they  will 
have  four  hats  between  them  and  no  boots,  and 
severe  commercial  depression  will  ensue.  The 
superfluous  hats  will  be  worthless,  and  both  A 
and   B   will   go   barefoot. 

Now,  something  like  this  actually  occurs  in  our 
industry.  One  employer  is,  of  course,  not  wholly 
ignorant  of  what  others  are  doing.  He  watches 
the  course  of  trade,  and  forms  the  best  judgment 
possible  of  the  probable  fluctuations  of  the  market. 
But  it  is  the  interest  of  each  employer  to  extend 
his  own  business,  whether  at  the  cost  of  others 
or  not.  There  is,  therefore,  a  constant  pressure 
to  expand,  which  in  process  of  time  has  its  efifect 
in  a  collapse  of  prices,  which  makes  it  impossible 
to  pay  the  fixed  charges  on  industry  and  leave 
a  margin  of  profit.  Stagnation  ensues.  Produc- 
tion is  arrested  till  prices  begin  to  rise  again  and 


62  THE  LABOUR  MOVEMENT 

the  cycle  renews  itself.  There  is  no  systematic 
attempt  to  get  what  is  necessary  and  good  for  the 
community  produced,  neither  more  nor  less.  On 
the  contrary,  every  man  produces  what  he  thinks 
some  one  will  give  a  good  price  for,  and  if  many 
other  people  have  been  thinking  the  same  thing 
there  will  be  a  glut  in  the  market.  And  hence 
the  paradox  of  modern  industry,  that  plenty  is 
the   cause   of   starvation. ^ 

Now,  if  we  go  back  to  A  and  B  we  may  hope 
that  they  will  learn  wisdom  from  experience.  They 
have  but  to  take  a  very  simple  step.  Instead  of 
retiring  each  to  his  own  abode  to  work  apart, 
they  have  merely  to  consult  with  one  another  as 
to  their  respective  needs,  and  set  about  to  help 
one  another  in  supplying  them.  Instead,  then,  of 
A  making  something  that  he  thinks  B  will  buy, 
with  a  view  to  proving  on  the  exchange,  while  B 
works  similarly  for  his  profit,  A  and  B  will  now 
work  together,  create  a  joint  product,  and  share 
it  between  them — in  other  words,  they  will  co- 
operate. 

Now,  the  beginning  of  this  method,  humble  as 
it  is,  is  seen  in  the  Co-operative  Store.  Instead  of 
leaving  it  to  individual  millers  and  shoemakers 
and  grocers  to  supply  their  needs  and  make  what 

*  It  was  at  one  time  contended  by  economists  that  permanent 
and  general  over-production  is  an  impossibility.  This  is  probably 
true,  supposing  the  machinery  of  exchange — social  and  material- 
perfected.  Meanwhile,  nothing  prevents  continual  and  repeated 
over-production  in  many  departments  of  industry  at  once,  over- 
production being  understood  relatively  to  the  existing  effective 
demand.  From  the  point  of  view  of  good  economic  organisation 
there  is  over-production  whenever  the  price  is  too  low  to  allow 
adequate  remuneration  for  producers,  whether  employers  or 
employed.  Such  a  contingency  is  not  only  possible,  but  frequent, 
the  low  price  continuing  for  considerable  periods,  and  varying 
according  to  circumstances — i.e.,  according  to  the  ease  with 
which  demand  for  the  article  expands  or  the  supply  of  it  gets 
contracted. 


CO-OPERATION  63 

profit  they  can,  Co-operators  undertake  to  supply 
their  own  needs,  or  to  direct  others  to  do  so. 
Co-operation  accordingly  represents  the  organisa- 
tion of  industry  by  a  community  of  consumers  in 
the  interest  of  all  as  consumers.  As  such,  it  is  the 
natural  supplement  to  organisation  by  producers. 
Now,  a  Co-operative  Society,  like  a  Trade 
Union,  is  primarily  an  association  of  some  of  the 
residents  in  a  particular  town  or  village.  As  such;, 
its  scope  and  influence  on  the  regularity  of  industry 
and  the  distribution  of  wealth  are  necessarily 
limited  and  partial.  It  is,  for  one  thing,  almost 
entirely  confined  to  the  business  of  shopkeeping. 
It  is  thus  a  partial  regulation  of  one  form  of 
industry  in  the  interests  of  a  small  group  of  con- 
sumers. A  wider  future  opened  upon  Co-operation 
when  the  Federal  principle  was  introduced.  We 
have  seen  something  of  what  Federation  can  do 
for  the  Trade  Union  movement.  What  it  has  done 
for  Co-operation  is  even  greater.  It  has  trans- 
formed an  aggregate  of  isolated  and  comparatively 
petty  shops  into  an  almost  national  organisation, 
undertaking  wholesale  production  and  distribu- 
tion ^  on  a  scale  large  enough  to  form  an  appre- 
ciable fraction  of  the  commerce  of  the  country, 
and  linking  a  million  men  and  women  all  over  the 
island  by  a  common  interest.  Through  the  Federal 
principle,  then,  Co-operation  and  Trade  Unionism 
are  growing  to  be  modes  of  national  organisation, 
and  it  is  only  as  their  development  in  this  direction 
grows  complete  that  they  take  their  true  place 
as    contributing    to    the    collective    control    of    in- 

'  The  two  great  Wholesale  Societies  exist  to  supply  the  Retail 
Stores.  They  are,  in  fact,  associations  of  which  the  local  societies 
are  members.  The  English  Wholesale  had,  in  1891,  a  member- 
ship of  966  societies,  and  sold  goods  to  its  members  to  the  value 
of  £8,000,000.  In  1910  it  had  1160  members  and  its  sales 
amounted  to  ;£26,567,ooo. 


64  THE  LABOUR  MOVEMENT 

dustry  in  the  interests  of  the  nation  as  a 
wlwle. 

The  Co-operative  Society,  according  to  our 
analysis  of  its  principle,  is  a  community  of  con- 
sumers, undertaking,  through  their  committee  and 
officials,  to  provide  the  goods  they  require  for 
their  own  use.  They  find  the  capital  and  direct 
the  management,  and  we  have  thus  a  form  of  the 
control   of   production   by   consumers. 

This  fact  has  been  in  some  degree  obscured 
by  the  tendency  of  the  movement  to  concentrate 
itself  upon  that  form  of  production  which  is  known 
as  retail  trade.  Many  people  would  hardly  con- 
sider the  retail  trader  as  a  producer  at  all,  and 
are  puzzled  by  the  inclusion  of  shopkeeping  among 
the  branches  of  production. 

But  there  is  a  genuine  sense  in  which  every- 
body is  an  agent  of  production  who  assists  in 
conveying  goods  to  the  consumer.  The  baker's 
boy  who  brings  the  bread  round  in  a  cart  to  the 
house  is  no  whit  less  a  producer  of  the  bread  than 
the  baker  who  makes  the  loaf,  or  the  seamen  and 
railwaymen  who  carried  the  wheat  from  the 
Argentine.  What  one  wants  is  not  wheat  that  is 
in  the  Argentine,  nor  bread  that  is  in  the  bakery, 
but  a  loaf  on  the  table  ;  and  every  one  who  has 
assisted  in  making  the  loaf  out  of  its  original 
material,  and  in  bringing  it  to  the  table,  is  equally 
an  agent  in  the  production  of  the  loaf  which  is 
required.  But,  furthermore,  Co-operation  is  no 
longer  confined  to  retail  trade.  It  not  only,  as 
above  shown,  does  a  large  wholesale,  and  therefore 
also  a  large  transport  business,  but  it  is  steadily 
extending  itself  to  manufactures  of  various  kinds. 
Here,  then,  we  have  a  vigorous  and  growing  move- 
ment based  on  the  principle  that  the  customer 
sets  the  producer  to  work,  and  regulates  his  in- 


CO-OPERATION  65 

dustry  through  his  committee.  That  is,  we  have 
the  beginnings  of  a  machinery  for  correlating 
demand  and  supply,  and  thus  doing  something  to 
mitigate  the  fluctuations  of  trade,  from  which  all 
classes  suffer  so  much.' 

Now,  in  a  Co-operative  enterprise  profit  either 
accrues  to  the  community  or  it  is  simply  abolished. 
The  method  by  which  this  is  effected  is  well  known. 
The  member  purchasing  goods  at  the  Co-opera- 
tive Store  pays,  in  the  first  instance,  the  full 
market  price  of  the  article.  But  he  receives 
a  tally  for  the  amount  of  the  purchase,  and 
on  sending  in  his  tallies  at  the  end  of  the  quarter 
receives  a  share  of  the  dividend  proportionate  to 
the     amount     of     his     purchases     as     guaranteed 

'  This  result  cannot,  indeed,  be  expected  on  any  great  scale 
until  a  far  larger  proportion  of  the  trade  of  the  country  is 
conducted,  in  one  form  or  another,  on  Co-operative  lines.  But 
the  tendency  is  already  evident.  Both  Mr.  Mitchell  and  Mr. 
Maxwell  (Chairman  of  the  Scottish  Wholesale  Society)  dwell  on 
this  effect  of  Co-operation.  Mr.  Mitchell  (Evidence  before 
Labour  Commission,  p.  13)  expressly  attributes  the  greater 
continuity  of  work  for  the  Co-operative  employee  to  the 
fact  that  "we  have  an  organised  market  for  our  produc- 
tions." Mr.  Maxwell  (Evidence,  p.  36)  says  that,  owing  to 
the  steady  increase  of  trade,  "  workmen  and  workwomen  have 
almost  a  certainty  of  constant  employment  in  the  Society."  In 
the  clothing  factories,  he  says,  "during  the  slack  season  we 
are  so  certain  of  an  outlet  for  our  productions,  we  make  up 
larger  stocks,  thus  giving  employment  all  the  year  round." 
There  is,  again,  a  confidence  in  the  relations  of  the  Wholesale 
Society  and  its  customers,  which  prevents  injury  from  the  small 
accidents  of  commerce,  and  tends  to  stability.  And  this  result 
would  be  more  marked  if  Co-operative  trade  were  large  enough 
to  set  the  tone  to  industry  as  a  whole. 

Messrs.  Hallsworth  and  Davies,  on  the  other  hand  ("The  Work- 
ing Life  of  Shop  Assistants,"  pp.  108  seq),  hold  that  regularity  of 
employment  in  co-operative  service  is  a  thing  of  the  past.  Yet 
they  give  tables  of  members  of  the  National  Union  of  Shop 
Assistants  on  unemployed  benefit  from  which  it  appears  that  the 
average  percentage  on  benefit  since  1894  has  been  7*3,  while 
the  corresponding  figure  for  the  Amalgamated  Union  of 
Co-operative  Employees  is  2"o. 

5 


66  THE   LABOUR  MOVEMENT 

thereby.  To  some  people  this  looks  like  a  mere 
clumsy  way  of  giving  to  him  with  one  hand  and 
taking  away  with  the  other.  "  Why  not  lower 
prices  at  once?  "  they  say.  Others  have  attached 
importance  to  it  as  a  means  of  encouraging  thrift 
by  putting  people  in  possession  of  two  or  three 
pounds  at  once,  instead  of  saving  for  them  on 
each  purchase.  But  there  is  more  in  the  device 
than  this.  It  cancels  profit.  A  society  of  con- 
sumers has  undertaken  production.  All  the  pro- 
ducers being  paid,  cost  of  production,  including 
management,  being  met,  there  remains  a  balance. 
This  balance  would  be  a  profit  if  the  community 
were  selling  to  outsiders.  But  they  are  selling  to 
themselves.  There  are,  therefore,  two  things  that 
they  can  do  with  the  profit.  They  can  either 
communise  it— apply  it  to  certain  common  pur- 
poses. Or  they  can  cancel  it — that  is,  return  to 
each  individual  the  share  of  the  profit  that  has 
been  made  out  of  his  purchases.  Actual  societies 
follow  both  methods,  but  in  unequal  proportions. 
They  reserve  a  percentage  for  provident  and 
educational  purposes,  and  the  rest  they  return.' 
Both  methods  abolish  profit  on  exchange  in  the 
strict  sense  of  the  term.  There  accrues  from  the 
sales  a  surplus  value  over  the  cost,  and  this  is 
profit.  But  the  profit  returns  to  those  out  of  whose 
pockets  it  comes — to  the  individual  purchaser  or 
the  community.  There  are  no  separate  business 
establishments  exchanging  one   with  another,  and 

'  In  earlier  editions  I  described  the  whole  of  the  profits  as 
communised.  This  is  an  error,  and  I  fancy  an  error  closely 
connected  with  the  actual  weaknesses  and  limitations  of 
Co-operation.  Had  the  Co-operative  Societies  really  determined 
from  the  first  to  hold  the  profits  as  a  common  possession,  and 
found  means  of  investing  them,  for  example,  in  land  and  houses 
for  members,  co-operation  might  have  spread  automatically  and 
we  should  have  heard  fewer  complaints  of  the  individualistic 
spirit  within  it. 


CO-OPERATION  67 

therefore  no  one  who  makes  profit  out  of  another. 
The  nerve  of  competition   is   severed. 

Now,  voluntary  Co-operation  is  a  great  and 
growing  movement,  and  some  of  its  more  modern 
developments  are  of  great  promise  for  the  future 
of  the  country.  But  the  total  fraction  of  the 
national  industry  organised  on  this  basis  is  still 
very  small.  We  should  have  to  wait  a  very  long 
time  for  social  progress  if  we  had  nothing  to 
trust  to  but  the  growth  of  this  movement,  benefi- 
cent as  it  is.  But,  in  fact,  one  of  the  greatest 
services  that  the  Co-operators  have  done  is  to 
set  a  model  of  the  control  of  industry  by  asso- 
ciated consumers.  The  model  can  be  followed, 
at  any  rate  the  principle  involved  in  it  can  be 
applied,  in  directions  and  by  methods  very  different 
from  those  of  the  Co-operative  Store. 

There  are  many  things  which  practically  all  the 
members  of  a  community  require.  Such  are 
security  to  life  and  property,  good  roads,  means 
of  conveyance  and  communication,  light,  fresh  air 
in  open  spaces,  water,  and  the  rest.  And  as  to 
these,  notice  that  demand  is  very  constant,  and 
people  are  very  nearly  unanimous  as  to  the  quality 
of  the  article  desired.  There  is  little  room  for 
variation  of  taste  in  the  matter  of  drinking-water, 
or  even  railway  travelling.  In  these  cases,  then, 
where  all,  or  nearly  all,  people  require  a  com- 
modity, and  where  individuals  do  not  differ  much 
in  their  tastes,  a  different  form  of  co-operation  has 
been  growing  up— I  mean  the  co-operation  that 
makes  use  of  legally  established  machinery.  The 
dwellers  in  any  thriving  town  which  provides 
itself  through  its  corporate  government  with  the 
requisites  mentioned  are,  industrially  considered, 
members  of  a  large  Co-operative  Society.  They 
find   that   as   a   body   they   have   certain   needs   in 


68  THE   LABOUR  MOVEMENT 

common  ;  they  direct  their  servants,  the  mayor 
and  the  councillors,  to  make  arrangements  to 
supply  these  needs,  and  they  raise  the  necessary 
capital  by  a  rate  upon  themselves.  This  is  Co- 
operation, or,  if  you  prefer  it,  Socialism.  On  this 
side  the  two  ideas  are  one.  In  each  case  the 
persons  vv^ho  are  to  use  the  product  set  the  pro- 
ducer in  motion,  and  determine  the  quantity  and 
quality  of  the  product. 

In  this,  as  in  voluntary  Co-operation,  we  have 
the  community  of  consumers  directing  production  ; 
if  there  is  a  surplus  over  the  cost  of  production, 
it  can  be  used  either  to  reduce  prices  or  to  relieve 
the  rates  or  for  public  improvements,'  and  for  this 
area  of  industry  once  more  we  eliminate  "  profit 
on  exchange."  Municipal  trading,  then,  is  simply 
a  step  to  the  collective  control  of  industry  in  the 
interests  of  all.  It  differs  from  voluntary  co- 
operation essentially  in  the  employment  of  legal 
machinery,  a  difference  justified  by  the  nature  of 
the  commodities  provided.  Its  works  are  financed 
out  of  the  rates  to  which  every  householder  must 
contribute  whether  he  personally  requires  the  ser- 
vice or  not.  The  Co-operative  Society  is  an  associa- 
tion which  any  one  is  free  to  join  or  leave.  The 
municipal  business  is  one  in  which  every  rate- 
payer must  take  his  share  of  the  risks.  In  the 
case  of  the  State  the  compulsion  is  even  more 
general.  Every  one  who  lives  in  the  country  may 
be  said  to  be  a  partner  directly  or  indirectly  in 
its  undertakings.  Yet  industrially  considered  the 
national  and  the  municipal  government  differ  in 
size   rather  than   in   anything  more   fundamental  ; 

'  The  alternatives  are  closely  analogous  to  those  already 
described  in  the  case  of  the  Co-operative  Societ}'.  In  the 
first  case  profit  is  cancelled ;  in  the  second  and  third  it  is 
applied  to  common  purposes. 


CO-OPERATION  69 

and  if  the  dwellers  in  a  municipality  may  with 
advantage  co-operate  for  producing  what  is 
needed  for  their  town,  a  whole  nation  may,  with 
equal  advantage,  set  its  central  government  to  work 
for  things  pertaining  to  the  country  as  a  whole. 

Two  objections  are  taken  both  to  municipal  and 
to  national  trading,  which  must  be  briefly  noticed. 
The  first  turns  on  the  very  principle  of  compul- 
sion, A  man  wishes  to  educate  his  own  children 
at  home  or  at  a  private  school.  Why  should  he  be 
made  to  pay  rates  and  taxes  for  the  education  of 
other  people's  children?  Again,  he  has  a  motor- 
car and  never  uses  the  trams.  Why  should  his 
money  be  risked— even  if  there  is  a  chance  of 
ultimate  return— on  the  tramways?  He  does  not 
use  electric  light,  or  could  conveniently  supply 
power  enough  for  himself.  In  fine,  he  cares  for 
none  of  these  things.  These  questions  probe  deep 
into  the  social  structure.  At  this  point  it  is  suffi- 
cient to  reply  that  there  are  two  sides  to  the 
account  between  the  State  and  the  individual,  or 
the  city  and  the  ratepayer.  The  prosperous  citizen 
who  has  built  up  a  great  business  through  energy, 
ability,  and  enterprise  is  apt  to  think  of  himself 
too  exclusively  as  the  architect  of  his  own  fortunes, 
and  of  the  machinery  of  life  that  he  finds  to  his 
hand  as  though  it  were  the  gift  of  Nature.  The 
State  taxes,  the  city  rates,  present  themselves  to 
him  as  a  mere  deduction  from  his  profits,  a  burden 
imposed  upon  him  by  a  community  which  gives 
him  nothing  in  return.  In  some  measure  this 
burden  is  increased  by  the  necessities  of  less  pros- 
perous people  to  whom  he  would  not  mind  giving 
something  in  charity,  though  he  resents  the  com- 
pulsion. On  reflection  he  may  recall  that  he 
himself  uses  the  streets,  and  he  may  even  be 
persuaded  by  figures  that  his  motor  costs  the  public 


70  THE   LABOUR  MOVEMENT 

something  in  road  repairs.  He  will  admit  that 
lighting  and  sanitation  affect  him,  and  on  consider- 
ation he  may  acknowledge  that  policemen  and 
prisons  exist  very  largely  for  his  good.  What  he 
seldom  succeeds  in  grasping  clearly  is  that  he 
himself  only  exists  through  the  goodwill  of  society. 
The  business  of  which  he  is  doubtless  in  a  direct 
sense  the  immediate  creator  is  in  a  more  indirect 
but  equally  real  sense  the  creation  of  society.  It 
is  the  outcome  of  the  entire  social  order.  It  pre- 
supposes peace,  prosperity,  industry,  health,  unim- 
peded commercial  intercourse^  a  certain  degree  of 
probity  and  competence  in  business  dealings,  a 
measure  of  intelligence,  sobriety,  and  uprightness 
in  the  classes  from  which  his  employees  are  drawn, 
and  a  hundred  other  things,  to  name  any  one  of 
which  is  to  mention  some  element  in  the  social 
order,  something  which  has  been  achieved  in 
degree  by  the  painful  efforts  of  successive  gene- 
rations of  reformers,  something  which  can  only 
be  achieved  in  higher  degree  by  further  efforts  of 
a  social  character.  Now,  to  the  prosperous  indi- 
vidual the  community  has  a  right  to  say  :  "Go 
to.  You  think  that  you  made  yourself,  and  that 
we  are  a  mere  drag  on  you.  But  before  you  ever 
were  we  are.  We  sheltered  and  nourished  your 
life.  We  are  the  order  which  made  your  path 
straight.  We  are  the  atmosphere  of  thought  from 
which  you  took  your  ideas,  which  you  imagined 
to  be  your  own.  We  are  the  men  and  women 
whom  you  employ.  We  are  the  men  and  women 
who  buy  of  you.  Without  us  you  are  absolutely 
nothing.  We  quite  grant  that  without  you  and 
the  like  of  you  we,  too,  should  be  less  than  we 
are.  You  are  a  part  of  us,  and  a  part  which  we 
can  value.  But  grant,  if  you  please,  that  this  is 
a    partnership,    that    we    are    partners    whom    you 


CO-OPERATION  71 

cannot  dispense  with,  and  that  we  may  make  our 
terms  for  the  continuance  of  the  association.  Our 
terms  are  that  you  contribute  your  rateable  share 
to  this  common  life  of  ours  and  to  the  things 
which,  judging  according  to  the  best  of  our  lights 
and  after  hearing  all  points  of  view  discussed, 
we  deem  advantageous  to  its  healthy  maintenance 
and  further  development.  If  you  do  not  personally 
benefit  by  this  or  by  that  enterprise,  ask  yourself 
whether  you  do  not  upon  the  whole  gain  in  health, 
security,  and  comfort  from  the  measures  taken  to 
promote  the  general  health,  the  general  comfort, 
the  general  intelligence.  If  you  are  still  not  satis- 
fied we  must  ask  you  to  reflect  that  you  are  re- 
paying a  debt  and  that  we  are  far  from  demanding 
twenty  shillings   in   the   pound." 

The  argument  for  compulsion  rests  entirely  on 
the  social  value  of  the  State  or  municipal  organisa- 
tion. In  industrial  matters  it  is  commonly  opposed 
by  the  contention — and  this  is  the  second  of  the 
objections  to  which  we  have  referred — that  public 
service  is  less  efficient  than  private  enterprise.  This 
contention  is  not  easy  to  confute  by  a  direct  appeal 
to  the  great  extension  of  municipal  undertakings. 
That  extension,  indeed,  would  hardly  have  con- 
tinued as  it  has  done  if  the  municipal  undertakings 
were  generally  ill-conducted.  But  it  is  open  to 
objectors  to  reply  that  hitherto  public  enterprise, 
whether  national  or  municipal,  has  been  confined 
to  a  single  class  of  public  services.  The  alternative 
to  public  organisation  was  monopoly.  Gas-works, 
water-works,  tramway  services,  it  would  be  pointed 
out,  do  not  provide  a  suitable  field  for  competition. 
There  could  not  well  be  two  sets  of  tramlines 
following  the  same  route,  nor  could  there  con- 
sistently with  economy  be  competing  gas-mains 
or  rival  electric  supplies.    Now,  the  objectors  would 


72  THE   LABOUR   MOVEMENT 

very  generally  admit  that,  monopoly  for  monopoly, 
a  public  service  is  preferable  to  private  supply. 
If  there  are  monopoly  profits,  they  should  go  into 
the  pockets  of  the  community.  If  there  is  to  be 
monopoly  management,  it  should  be  in  the  hands 
of  men  responsible  to  the  public,  not  of  men  whose 
business  it  is  to  make  as  much  as  possible  out  of 
the  public.  Thus  it  would  be  said  there  has  been 
a  perfectly  intelligible  reason  for  that  extension  of 
public  enterprise  which  the  last  quarter  of  a 
century  has  witnessed,  but  it  is  a  reason  which, 
rightly  understood,  puts  a  limit  to  that  extension. 
The  best  organisation  of  industry  in  the  interest 
of  the  consumer  is  that  of  perfectly  free  and  open 
competition.  For  where  competition  exists  pro- 
ducers will  always  be  endeavouring  in  their  own 
interests  to  attract  custom  by  lowering  cost,  devis- 
ing economies,  and  inventing  new  and  more 
effective  methods.  Where  competition  fails  there 
a  public  body  steps  in  to  prevent  things  falling 
into  the  hands  of  monopoly,  but  not  elsewhere. 

It  must  be  admitted  that  the  extension  of  public 
enterprise  has  been  in  the  main  in  the  sphere  of 
monopoly,  and  it  may  be  admitted  further  that 
the  most  suitable  sphere  of  public  enterprise  is 
the  supply  of  goods  of  standard  character,  in  uni- 
versal or  very  general  demand,  and  not  admitting 
of  much  variety  of  taste.  Where  there  is  great 
variety  of  individual  taste  purely  individual  pro- 
duction will  probably  have  a  permanent  function. 
The  spheres  of  literary  and  artistic  production  are 
the  typical  examples.  In  other  cases,  again,  where 
certain  groups  of  people  desire  a  special  commodity 
in  common  voluntary  co-operation  has  a  part  to 
play.  The  political,  literary,  or  scientific  associa- 
tion which  runs  a  journal  and  perhaps  maintains 
premises,   a   laboratory,   or   an   institution   for   its 


CO-OPERATION  73 

common  purposes,  is  a  case  in  point.  But  there 
seems  to  be  no  valid  reason  for  placing  a  definite 
limit  on  public  enterprise  at  the  point  where 
monopoly  ends  and  competition  becomes  possible. 
The  municipal  services  have  been  sufficiently  de- 
veloped to  prove  that  a  public  body  can,  if  it  has 
a  mind,  run  an  industry  with  great  efficiency.  In 
fact,  of  late  years  it  has  almost  ceased  to  be 
necessary  to  argue  the  abstract  principle.  People 
in  general  would  agree  that  the  desirability  of 
entrusting  a  particular  service  to  a  public  body 
depends  on  the  nature  of  the  case.  In  this  country 
we  have  brought  our  public  service  to  a  point  at 
which  we  can  generally  rely  on  at  least  as  high 
a  standard  of  honesty  and  good  sense  as  in  private 
enterprise,  and  if  in  anj  case  people  see  some 
palpable  reason  for  the  public  organisation  of  the 
supply  of  a  necessary  they  are  no  longer  willing 
to  listen  to  general  and  abstract  reasons  for  refus- 
ing to  make  the  experiment.  Meanwhile  there 
are  definite  advantages  to  be  gained  from  public 
organisation.  There  is  the  control  of  the  con- 
ditions of  labour,  the  organisation  of  industry 
which  tends  to  mitigate  periods  of  industrial  de- 
pression, the  economies  of  large  scale  production, 
the  common  enjoyment  of  the  profit,  and  from  the 
point  of  view  of  the  consumer  the  public  guarantee 
of  the  soundness  and  regular  supply  of  the  article. 
On  the  other  side,  if  the  public  undertaking  of  a 
service  is  not  opposed,  neither  can  it  be  pressed  on 
merely  general  grounds.  The  public  service  must 
rnaintain  and  develop  its  efficiency  in  order  to 
justify  each  new  extension.  All  that  we  can  insist 
on  here  is  that,  given  equal  efficiency,  there  are 
definite  points  gained  by  public  control  in  the 
communisation  of  profit,  the  regulation  of  industry, 
and  the  opportunity  of  maintaining  the  conditions 
of  labour  in  accordance   with  public   feeling. 


74  THE   LABOUR  MOVEMENT 

But  these  advantages  are  no  small  makeweight 
in  the  scale.  In  substituting  Co-operation— 
whether  voluntary  or  State-regulated— for  competi- 
tion, we  are  Introducing  a  new  and,  I  should 
contend,    a   desirable   principle   into   industry. 

Those  who  at  the  present  day  carry  on  business 
for  personal  profit  or  wages  are  unintentionally 
performing  a  social  function  of  the  first  import- 
ance. I  say  unintentionally  because,  as  things 
now  stand,  neither  employers  nor  workmen  exercise 
themselves  much,  as  a  rule,  about  the  social 
usefulness  of  the  commodity  they  are  producing 
or  distributing.  For  them  the  one  thing  needful 
is  to  find  sufficient  purchasers,  and  the  true  com- 
mercialist  spirit  cares  little  for  the  destiny  or  use- 
fulness of  the  commodity  it  has  produced  when  the 
sale  is  once  made.  Of  course  there  are  honourable 
exceptions  to  this  rule.  There  are  men  who  would 
rather  starve  than  engage  in  a  socially  noxious 
traffic  of  any  kind,  and  there  are  many  who  would 
bear  considerable  loss  rather  than  turn  out  an  un- 
sound article.  Nevertheless,  the  difficulty  of  stir- 
ring any  social  feeling  against  trades^  or  forms  of 
conducting  trade,  which  cost  the  lives  or  impair 
the  health  of  many,  is  a  sufficient  evidence  of 
the  fact  that,  however  important  be  the  actual 
function  subserved  by  producers  under  an  indi- 
vidualist system,  the  performance  of  that  function 
is  not  the  motive  of  production,  and,  certain 
honourable  exceptions  apart,  bears  no  relation  to 
that  motive  at  all. 

Since,  then,  the  all-important  work  of  supplying 
the  material  and  other  needs  of  society  is  left  to 
Nature  or  to  chance,  there  is  little  need  for  wonder 
if  the  said  work  is  ill  performed.  Nor  is  it  of 
the  slightest  use  to  hurl  denunciations  at  the  head 
of  any  particular  class  at  present  engaged  in  pro- 


CO-OPERATION  75 

duction.  If  over-pressure  of  work  alternates  with 
enforced  idleness,  if  50  per  cent,  profits  are  found 
side  by  side  with  ruin,  if  shoddy  or  adulterated 
goods  fill  the  market,  society  has  no  one  but  itself 
to  blame.  It  countenances  and  upholds  a  certain 
system— or  rather  absence  of  system— and  it  must 
take  the  consequences. 

The  reform  needed,  then,  is  a  quite  different 
method  of  producing  wealth.  We  want  a  new 
spirit  in  economics— the  spirit  of  mutual  help,  the 
sense  of  a  common  good.  We  want  each  mari  to 
feel  that  his  daily  work  is  a  service  to  his  kind, 
and  that  idleness  or  anti-social  work  are  a  dis- 
grace. This  new  spirit,  and  the  practical  arrange- 
ment for  giving  it  effect,  we  have  seen  growing 
up  from  small  beginnings,  with  many  drawbacks 
and  limitations,  in  the  movements  here  reviewed, 
and  we  see  accordingly  in  their  development  the 
best  hope  for  the  immediate  future. 

But  now,  supposing  this  control  of  industry  by 
consumers  completed,  with  all  the  results  above 
enumerated  fully  realised,  what  guarantee  is  there, 
it  may  be  asked,  that  the  worker  will  be  adequately 
paid  or  good  conditions  of  work  secured?  We 
may  regulate  trade,  and  so  increase  our  total 
product,  and  we  may  communise  our  surplus,  but 
all  without  adequately  remunerating  the  worker. 
This  is  particularly  obvious  where  the  com- 
munities of  consumers  and  producers  are  not  the 
same— /.^.,  when  men  consume  who  do  not  pro- 
duce. Take  a  Co-operative  Society  employing 
workmen,  shop-assistants,  &c.  These  employees 
need  not  be  members  of  the  Society,  and  if  they  are, 
they  may  be  a  very  small  minority.  What  is  to 
safeguard  their  interests?  How  can  we  be  sure  that 
the  Society  will  not  be  as  anxious  to  increase  the 
common  profit  at  the  expense  of  the  workers  as  an 


76  THE   LABOUR  MOVEMENT 

ordinary  Joint  Stock  Company,  which  collectively 
is  apt  to  be  far  more  callous  in  such  matters  than 
its  members  are  as  individuals? 

There  are  two  possible  answers.  First  it  may 
be  said  that  the  principle  of  democratic  control 
will  suffice  to  secure  every  class  against  overwork 
and  under-payment.  Thus  it  would  be  contended 
that  the  Co-operative  movement  owes  its  vitality 
to  a  spirit  of  mutual  aid,  which  would  not  tolerate 
unfair  conditions  of  work  for  its  own  employees. 
In  fact,  co-operators  have  in  more  than  one 
instance  taken  a  leading  part  in  improving  con- 
ditions of  employment.  They  led  the  way  in  the 
reduction  of  hours  for  shop-assistants,  and  in  this 
respect  critics  admit  that  they  compare  favourably 
with  private  employers.'  As  to  wages  and  general 
conditions,  the  case  is  not  so  clear.  In  a  number 
of  stores  Messrs.  Hallsworth  and  Davies  find  the 
average  minima  for  male  assistants  to  vary  from 
24s.  2d.  in  the  grocery  to  25s.  6d.  in  the  butchery 
departments,  but  they  maintain  that  these  figures 
apply  mainly  to  the  "  organised  and  best-paid 
co-operative  workers,"  and  they  quote  cases  of 
men  receiving  less  than  £  i  a  week,  which  is  not  a 
living  wage. 2  For  women  assistants  they  give 
an  average  of  15s.  lod.,  but  they  also  quote 
instances  of  more  serious  under-payment. 3  A 
vigorous  movement  is  now  on  foot  for  the  establish- 
ment of  a  general  minimum  wage.  A  Committee 
of   the   Co-operative   Union   reported   in    1908    in 

'  "  It  is,  of  course,  well  known  that  so  far  as  hours  of  labour  are 
concerned  co-operative  societies  are  far  in  advance  of  private 
establishments''  ("The  Working  Life  of  Shop-Assistants,"  by  Jos. 
Hallsworth  and  Rhys  J.  Davies,  p.  13).  The  writers  are  "  members 
of  the  permanent  staff  of  the  Amalgamated  Union  of  Co-operative 
Employees."  A  table  (p.  79)  shows  considerable  reductions  in 
hours  between  1893  and  1909.  Only  9-9  of  the  Societies  making 
returns  at  the  later  date  had  a  working  week  exceeding  58A  hours. 

=  Op.  cii.,  pp.  46  ff.  3  p,  57, 


CO-OPERATION  77 

favour  of  a  wage  of  24s.  for  men  and  17s.  for 
women,'  with  a  corresponding  scale  for  boys  and 
girls,  and  over  a  hundred  societies  have  adopted 
this  scale,3  but  the  Wholesale  Society  has  hitherto 
(April,  191  2)  declined  to  do  so.  Upon  the  whole 
it  may  be  said  that  while  materials  for  a  full  com- 
parison with  competitive  trade  are  not  available, 
the  impression  left  by  criticism  of  the  Co-opera- 
tive movement  on  this  side  is  that  it  has  done 
something  for  the  position  of  the  employee,  but 
that  it  has  by  no  means  done  enough  to  justify 
the  view  that  the  conditions  of  labour  may  safely 
be  left  to  the  care  of  an  organisation  of 
consumers. 3 

We  come,  then,  to  our  second  answer.  The 
natural  guardian  of  the  rights  of  producers,  or 
any  branch  of  producers  as  such,  is  the  Trade 
Union.  Now,  this  answer  is  not  free  from  diffi- 
culty. When  an  industry  has  become  a  branch  of 
the  public  service,  a  strike  wears  something  of  the 
aspect  of  rebellion.  Even  the  railway  strike  of 
191 1  was  regarded  in  this  light  in  some  cjuarters, 
though  the  railways  are  not  national  property,  and 
though  the  men  were  striking  for  the  elementary 
rights  of  combination.  But  apart  from  nationalisa- 
tion, as  industry  becomes  more  and  more  an  inter- 
dependent whole  it  offers  opportunities  to  form 
combinations,  whether  of  labour  or  of  capital,  to 
paralyse  the  whole  by  a  stoppage  at  certain  vital 
points.  If  any  single  organisation  independent 
of  the  State  controls  the  coal,  the  railway  traffic, 
or  in  any  great  town  the  lighting,  it  is  in  a  position 
to  exact  heavy  terms  from  society  for  permission 

■  The  Women's  Co-operative  Guild  recommend  19s. 

=  The  Co-operative  Employee,  March,  1912. 

3  In  some  cases  it  appears  that  societies  even  disfranchise 
employees,  not  allowing  them  to  speak  or  vote  at  business 
meetings  (Hallsworth  and  Davies,  pp.  140,  141). 


78  THE   LABOUR  MOVEMENT 

to  go  on  with  its  ordinary  avocations.  The 
danger  is  likely  to  increase  with  the  development 
of  invention.  The  day  may  come  when  all  the 
main  industries  will  be  dependent  on  a  supply 
of  electrical  energy,  and  those  who  control  this 
energy  will  control  the  situation.  This  is  one 
of  the  reasons  which  will  force  society,  with  or 
against  its  will,  to  assume  ultimate  responsibility 
for  the  supply  of  the  fundamental  necessaries.  But 
even  if  all  such  services  were  directly  managed  by 
State  officials,  it  is  only  one  side  of  the  problem 
that  would  be  solved.  The  State  might  control 
the  management,  but  the  labour  problem  would 
remain.  It  is  not  enough  to  reply  that  the  work- 
people would  have  the  vote  to  guarantee  just  con- 
sideration of  their  rights.  This  proves  both  too 
much  and  too  little.  The  voting  power  of  public 
servants  when  well  organised  and  selfishly  exer- 
cised is  already  in  certain  places  a  serious  political 
problem.  It  means  that  certain  seats  are  won 
and  lost  on  considerations  of  work  and  wages 
which  are  not  broad  considerations  of  public 
policy.  In  proportion  as  public  services  are  ex- 
tended the  problem  will  become  more  urgent,  and 
the  cry  will  be  to  remove  all  spending  departments 
from  direct  parliamentary  control  in  order  to  save 
elections  from  turning  on  questions  of  the  wages 
and  hours  of  certain  local  classes  of  public  em- 
ployees.»      On  the  other  hand,   if   the   workpeople 

»  This  is  at  best  a  partial  solution.  The  ultimate  control 
must  remain  with  Parliament.  Now,  recent  events  have  brought 
the  nationalisation  of  railways  to  the  verge  of  practical  politics. 
Should  this  step  be  actually  taken  the  political  problem  would  at 
once  become  urgent.  In  almost  every  constituency  there  would 
be  a  group  of  public  servants,  numerous  enough  in  many  cases 
to  turn  an  election.  But  we  could  not  suffer  a  large  proportion 
of  elections  to  turn  on  bargains  between  candidates  and 
public   servants   on   questions  of   hours  and  wages.     The   only 


CO-OPERATION  79 

are  not  politically  organised  and  concentrated  they 
may  get  very  insufficient  attention.  In  particular 
the  worst  paid,  who  have  always  the  greatest 
difficuky  in  stating  their  case  and  making  their 
voice  heard,  may  be  left  to  the  somewhat  chilly 
mercies  of  officialism.  The  difficulty  would  remain 
if  the  entire  industry  of  the  country  were  under 
national  control.  Each  individual,  and  what  js 
more  important,  each  section  of  workers  would 
still  have  particular  interests  opposed  to  the 
interests  of  others.  Hence  within  any  period  which 
we  need  consider  it  will  remain  necessary  for 
each  group  of  workers,  whether  engaged  in  the 
public  service  or  not,  to  form  and  maintain  their 
own  organisations  for  their  protection. 

But  if  the  right  of  combination  is  to  be  granted 
to  the  weakness  of  the  individual,  what  of  the 
power  of  combination  in  the  vital  industries? 
Where  an  industry  is  like  a  main  artery  which  one 
might  compress  with  the  finger  and  so  stop  the 
entire  circulation,  is  any  one  but  the  community  to 
have  the  control  of  that  artery?  If  a  close 
combination  can  control  the  entire  coal  trade, 
what  terms  might  it  not  demand  of  the 
public  for  the  means  of  warmth  and  of 
industry?  It  is  to  be  observed  here  that,  given 
perfect  combination,  the  workman  is  in  a  stronger 
position  for  once  than  the  employer.  For  in 
the  last  resort  as  against  a  group  of  coal- 
owners  the  State  might  appropriate  and  work  the 
mines.     But  no  power  of   law  could  compel  half 

resource  would  be  to  let  railwaymen  group  themselves  for  the 
return  of  their  own  candidates  as  between  whom  general 
political  sympathies  would  decide.  This  is  the  solution  proposed 
by  the  advocates  of  Proportional  Representation  alike  for  this 
and  for  other  multitudinous  difficulties  that  arise  from  the  great 
complexity  of  the  issues  submitted  to  the  constituencies  at  any 
election. 


80  THE   LABOUR  MOVEMENT 

a  million  of  men  to  go  underground  as  long  as 
they  choose  to  "  clem"  on  the  surface.  I  do  not 
suggest  that  the  Miners'  Federation,  Oir  any  other 
Trade  Union  has  ever  yet  enjoyed,  still  less  that  it 
has  taken  undue  advantage  of  such  power.  On 
the  contrary,  in  the  recent  strike  the  demands  of 
the  miners  were  moderate,  and  their  power,  as 
the  event  shows,  much  more  restricted  than  ap- 
peared on  the  surface.  In  general  Trade  Unions 
have  been  the  organisations  of  the  weaker  party, 
and  they  -have  in  the  main  fought  for  rights,  or 
for  gains  which  command  the  sympathy  of  im- 
partial men.  But  we  have  to  deal  with  a  possibility 
which  may  at  any  time  arise,  and  we  haVe  to. 
ask  how  Society  will  be  able  to  protect  itself. 
Without  pretending  to  a  complete  theoretical  solu- 
tion, it  may  be  suggested  ( i )  that  the  recurrence 
of  disputes  in  the  vita]  industries  will  probably 
force  the  State  to  assume  close  control  of  their 
conditions,  and  quite  possibly  the  direct  function  of 
management  ;  (2)  that  to  disallow  combination 
would  be  deeply  resented,  possibly  futile,  and 
possibly  also  a  source  of  future  injustice  to  the 
public  employees,  and  that  accordingly  (3)  the 
State  will  be  forced  to  protect  itself  by  other 
methods.  In  the  case  of  coal  a  simple  and 
probably  sufficient  method  would  be  that  of 
accumulating  stocks  by  keeping  up  full  work  in 
slack  times,  stocks  which,  if  they  belonged  to  the 
community,  would  save  the  public  from  being 
fleeced  iri  the  preparatory  period  of  a  struggle,  and 
which  should  be  sufficient  in  quantity  to  outlast  a 
strike. •     In  other  cases  it  would  be  wise  to  secure 

'  It  must  be  borne  in  mind  that  the  greater  the  number  of 
strikers  involved  the  greater  is  the  difficulty  of  holding  them 
together  through  a  long  period  of  privation.  It  is  impossible 
to  think  that  1,000,000  men  scattered  through  the  kingdom  would, 


CO-OPERATION  81 

an  alternative  staff,  and  this  will  not  be  difficult 
if  the  public  services  increase  in  number.  It  will 
be  a  matter  of  organising  technical  instruction, 
which  would,  in  fact,  be  desirable  on  other  grounds. 

Furthermore  there  are  many  channels  through 
v/hich  Trade  Unions  become  penetrated  by  wider, 
more  unselfish,  and  more  enlightened  views  of 
their  duties  and  their  interests.  Less  and  less 
can  a  small  group  look  to  its  own  interests  alone 
or  m^aintain  them  in  opposition  to  public  needs. 
The  federation  of  Union  forces,  if  formidable  in 
the  extension  of  power  which  it  gives,  is  surely 
beneficent  in  subduing  and  harmonising  local 
rivalries  and  stimulating  a  broader  outlook.  But 
if  we  conceive  Trade  Unionism  as  extending  its 
borders  so  as  to  include  the  bulk  of  the  working 
population,  we  may  reasonably  expect  a  parallel 
development  of  such  connecting  links.  There 
would  then  be  a  regular  machinery  for  the  adjust- 
ment of  disputes  between  different  classes  of 
workers.  At  the  same  time,  some  such  principles 
of  remuneration  as  have  been  suggested  above 
are,  in  fact,  coming  to  be  recognised,  and  in  pro- 
portion as  they  are  generally  accepted  they  will 
form  a  basis  for  the  impartial  settlement  of  dis- 
puted claims.  Lastly,  in  so  far  as  remuneration 
is  fairly  adjusted  and  profit  brought  into  the  public 
coffers,  the  sense  of  a  common  interest  in  the 
economic  prosperity  of  the  nation  becomes  a  living 
force  which  may  hold  in  check  though  it  cannot 
extinguish  sectional  ambitions  and  class  or  trade 
selfishness. 

In  the  last  chapter  we  saw  that  the  control  of 

in  fact,  hold  out  against  long  privations  without  a  deep  conviction, 
of  a  just  cause.  But  given  such  a  conviction,  it  is  desirable  that 
they  should  have  some  power  of  holding  out  even  as  against 
the  community. 

6 


82  THE   LABOUR  MOVEMENT 

industry  by  consumers  was  the  necessary  supple- 
ment to  Trade  Unionism,  We  have  now  seen  that 
the  control  by  consumers,  whether  in  the  form  of 
voluntary  Co-operation  or  of  Municipal  or  State 
Socialism,  leaves  a  gap  which  even  at  the  cost  of 
permanent  possibilities  of  friction  must  be  filled 
by  organisations  of  workers.  For  any  period  that 
we  can  reasonably  take  into  account  the  Trade 
Union  has  a  permanent  function  in  the  furtherance 
of  industrial  progress.  We  are  led,  therefore,  to 
consider  these  different  forms  of  the  Labour 
Movement  as  necessary  to  one  another.  In  fact, 
in  one  shape  or  another  all  three  alike  are 
introducing  the  principle  of  the  collective  control 
of  industry  by  the  community  in  the  interests  of 
all  its  members.  They  are  seeking  to  replace 
competition  and  the  forces  of  individual  self- 
interest  as  the  arbiters  of  industry,  by  a  deliberate 
and  systematic  arrangement  of  labour  and  com- 
merce in  the  best  interests  of  society  as  a  whole. 
They  are  all  at  present  in  an  inchoate  or  incom- 
plete condition  which,  to  some  extent,  disguises  this 
common  character,  but  this  none  the  less  expresses 
their  essential  tendencies  and  the  secret  of  their 
life  and  vigour. 

iWithin  its  own  sphere,  and  so  far  as  it  is  able 
to  carry  out  its  objects,  the  Trade  Union  entirely 
supersedes  free  competition  between  individuals 
actuated  by  their  own  interests  as  the  controlling 
force  of  industrial  life.  Where  the  Union  is  strong 
the  individual  workman  is  powerless  against  it. 
He  has  to  conform  to  its  regulations  as  to  wages, 
hours,  and  conditions  of  work,  no  matter  how  much 
better  a  bargain  he  may  think  that  he  could  drive 
on  his  own  account.  It  might  pay  him  on  occasion 
to  take  work  below  the  standard  wage,  but  the 
Union  will  prevent  him.     He  may  be  able  to  work 


CO-OPERATION  83 

beyond  the  regulation  hours  without  injury  to  him- 
self. He  is  forbidden  by  an  association  of  men 
of  average  strength.  He  might  be  willing  and 
able  to  take  risks  which  others  shun,  but  it  is 
not  allowed  him.  In  every  direction  he  is  limited 
and  confined.  It  matters  not  in  the  least  that 
the  compulsion  is  not  put  upon  him  by  the  law 
or  any  legally  constituted  authority.  His  "  liberty  " 
is  "  interfered  with  "  every  bit  as  much  wherever 
the  Union  is  sufficiently  strong  for  the  purpose, 
^e  has  to  learn  the  lesson  that  a  man  must  put 
up  with  some  losses  and  inconveniences  for  the 
general  good  of  his  neighbours.  He  is  confronted 
with  the  authority  and  power  of  the  judgment  of 
the  community  as  to  its  common  welfare.  The 
community  is  here  not  the  State  but  a  body  of 
workers,  and  its  decisions  are  enforced,  not  by 
officials  in  uniform,  but  by  duly  appointed  com- 
mittees and  officers  taken  from  the  ranks  of  the 
workers  themselves.  But  the  principle  of  common 
action  for  common  good  imposing  limits  on  indi- 
vidual action  for  personal  good  is  apparent  here, 
just  as  it  is  apparent  in  every  law  passed  by 
the  Houses  of   Parliament. 

There  is,  however,  an  important  difference. 
Parliament  represents,  or  should  represent,  the 
people  as  a  whole.  The  Trade  Union  represents 
a  certain  section  of  the  people,  and  in  the  past 
these  sections  have  been  relatively  small  and  iso- 
lated. Hence  the  Union's  authority  is  relatively 
weak  and  often  unduly  dominated  by  sectional 
interests.  The  true  principle  of  the  collective  con- 
trol of  industry  means  a  control  exercised,  if  not 
by  the  whole  nation,  yet  in  the  interests  of  the 
whole  nation.  But  we  have  alread^^  called  atten- 
tion to  tendencies  which  hold  sectionalism  in  check. 
In  the  great  national  Unions  of  to-day  very  diverse 


84  THE   LABOUR   MOVEMENT 

interests  of  many  localities  have  to  be  weighed 
against  one  another,  and  the  merits  of  disputes 
may  be  adjudged  coolly  and  dispassionately  by 
persons  living  at  a  distance,  and  responsible  to 
many  other  branches  than  the  one  affected.  ^  In 
this  way  the  sectional  character  of  Trade  Unionism 
grows  less  and  its  decisions  grow  in  weight, 
deliberateness,  and  power.  This  process  is 
furthered  by  the  development  of  the  Federal 
Principle,  by  the  Trade  Union  Congress,  by  the 
formation  of  a  Parliamentary  party,  and  in  another 
direction  by  the  International  Congresses  of  par- 
ticular trades  which  are  building  up  a  valuable 
counterpoise  to  the  national  rivalries  of  aggressive 
finance.  All  this  development  involves  an  immense 
extension  of  outlook,  incompatible  in  the  end  with 
the  narrowness,  the  pettiness,  and  the  tendency 
to  monopolistic  spirit  which  were  almost  insepar- 
able from  the  original  form  of  Union,  while  it  gives 
free  play  and  full  encouragement  to  the  broader 
public  spirit  which  recognises  the  true  identity  of 
interest  for  all  workers. 

This  is  quite  a  normal  and  healthy  development. 
Regarded  as  a  moral  and  educational  force, 
Unionism  begins  rightly  with  the  elements  of  the 
subject.  It  starts  with  the  workshop  and  teaches 
the  doctrine  of  fellowship  and  brotherhood  for  all 
who  work  at  the  same  bench.  The  lessons  of 
public  spirit  and  public  action  are  thus  first  learnt 
by  the  Trade  Unionist  in  relation  to  the  comrades 
with  whom  he  is  actually  associated  in  his  work 
and  daily  life.     But  the  training  once  perfect,  the 

'  Sometimes  it  would  even  seem  that  an  opposite  danger  has 
come  into  being,  and  that  the  officials  have  become  too  far 
removed  from  the  men  at  the  works.  Hence  we  have  had  strikes 
directed  virtually,  and  not  unsuccessfully,  against  the  authority 
of  the  officials  themselves. 


CO-OPERATION  85 

principle  is  easily  applied  to  a  wider  area.  He 
who  is  faithful  in  small  things  will  be  faithful 
also  in  great,  and  he  who  loves  and  will  serve  his 
brother  whom  he  hath  seen  will  learn  to  aid  his 
brother  whom  he  hath  not  seen.  This  is  working 
from  the  base  upwards— there  is  no  other  safe 
method.  Just  as  the  Trade  Union  represents  the 
limitation  of  each  man's  freedom  by  the  whole  body 
of  workers,  so  it  depends  for  its  very  existence  on 
the  loyalty  of  each  member  to  the  common  cause. 
Every  advance  in  Trade  Unionism  involves  a  pro- 
gress in  the  intelligence  and  public  spirit  of  the 
workers.  No  Union  can  exist  unless  the  mass 
of  its  members  are  prepared  for  mutual  help  and 
forbearance,  unless  they  have  unlearnt  the  lesson 
of  self-seeking  and  are  ready  to  make  sacrifices 
for  the  good  of  all. 

Trade  Unionism,  then,  as  it  grows  and  broadens, 
introduces  little  by  little  a  new  spirit  into  industry 
and  becomes  the  means  of  regulating  it  in  the 
interest  of  the  working  community.  And  as  in 
a  healthy  community  all  are  workers  who  are 
capable  of  work,  this  means  the  community  at 
large.  It  is,  of  course,  a  mere  vulgar  error  to 
regard  the  principle  of  Trade  Unionism  as  limited 
to  manual  work.  The  majority  of  the  learned 
professions  form  closer  Trade  Unions — either  vol- 
untary or  supported  and  incorporated  by  law — 
than  are  yet  to  be  found  in  the  world  of  Labour. 
It  is  true  that  these  Unions  of  professional  men 
leave  much  to  be  desired  in  their  constitution  and 
regulation.  It  is  even  possible  that  they  might  have 
something  to  learn  from  associations  of  manual 
workers.  But  be  that  as  it  may,  there  is  no  reason 
why  Trade  Unionism  should  not  extend  itself  to  the 
entire  working  population,  and  at  least  so  far  as 
manual    workers    are    concerned,    provide    avenues 


86  THE   LABOUR  MOVEMENT 

of  communication  and  methods  of  mutual  aid  which 
should  hold  sectional  interests  in  check  and  estab- 
lish a  true  control  of  the  conditions  of  industry 
in  the  interest  of  the  working  classes  as  a  whole. 

We  have  already  remarked  that,  as  Trade 
Unionism  represents  the  control  of  industry  by  the 
body  of  producers,  so  Co-operation  represents  the 
control  by  the  body  of  consumers.  So  far  as  its 
influence  extends,  it  supersedes  the  anarchy  of 
competition,  introduces  steadiness  and  continuity 
of  employment,  and  secures  the  enjoyment  of  the 
surplus  product  for  all  who  join  in  promoting  it. 
Like  Trade  Unionism  also,  it  rests  on  the  public 
spirit  of  its  members,  and  their  readiness  to  sacri- 
fice personal  profit  for  the  common  good.  It 
controls  industry,  so  to  say,  from  the  other  end, 
and  hence  its  action  is  complementary  to  that  of 
the  Unions,  securing  for  the  community  as  con- 
sumers the  benefits  which  as  workers  they  could 
hardly   obtain. 

Now,  both  the  Trade  Union  and  the  Co-operative 
Society  are  voluntary  associations  of  men  con- 
sciously formed  for  securing  certain  common  ends. 
But  if  we  inquire  a  little  more  deeply  than  usual 
what  the  State  is,  why  it  has  come  into  being, 
and  what  justifies  its  existence,  the  answer  must 
be  that  the  State  also  is  an  association  of  all  the 
dwellers  in  a  country,  an  association  that  has  no 
doubt  grown  up  unconsciously,  but  which  has 
grown  because  it  has  secured  certain  valuable 
results  for  all  its  members.  And  in  the  democratic 
State  we  get  the  true  principle  of  association  clearly 
worked  out,  namely,  that  all  citizens  shall  be  called 
on  to  serve  the  common  weal,  and,  on  the  other 
side,  that  the  State  shall  serve,  not  the  interest  of 
the  Few,  nor  even  of  the  Many,  but  the  interest 
of  All. 


CO-OPERATION  87 

Like  the  State,  the  Municipality  is  a  kind 
of  association,  but  exercising  a  more  limited 
authority  over  a  smaller  area.  There  is  a  differ- 
ence between  the  State  or  the  Municipality  and 
other  associations  formed  by  men,  in  that  to  these 
two  every  man  living  in  a  given  locality  must 
belong,  whether  he  likes  it  or  not.  He  must  sup- 
port them  by  his  contributions  and  he  must  submit 
to  their  authority.  In  the  case  of  the  Trade  Union 
or  Co-operative  Society  he  need  not  belong  to 
the  association  unless  he  chooses.  Yet,  at  least 
in  the  case  of  the  Union,  he  may  often  be  con- 
trolled by  the  common  power  notwithstanding  that 
he  denies  its  authority.  That  the  Union  is  a  volun- 
tary association  makes  no  difference  whatever  to 
the  reality  of  the  control  which  it  exercises  over 
individuals,  nor  does  it  diminish  by  one  jot  the 
sternness  of  its  "  interference  "  with  the  "  liberty 
of  the  subject  "  when  the  said  liberty  is  judged 
hostile  to  the  common  good.  The  apostles  of 
liberty  in  the  abstract — of  the  right  divine  of  all 
men  to  do  wrong — are  perfectly  logical  in  attacking 
the  Trade  Union  just  as  much  as  "  Socialistic  " 
legislation.  And  conversely  those  who  believe  that 
the  collective  control  of  industry  is  necessary  to 
the  economic  welfare  of  society  may  recognise  that 
this  control  may  on  some  sides  be  best  exercised 
by  a  voluntarily  formed  organisation,  on  others  by 
the  State  itself. 

Now,  the  control  of  the  State  may  take 
many  forms.  It  may  directly  organise  a  public 
service,  as  the  Post  Office,  or,  again,  the  railway 
system.  This  is  essentially  a  form  of  the  control 
of  industry  by  consumers,  and  given  a  com- 
petent Civil  Service  and  efficient  criticism  by 
a  representative  authority,  this  is  a  form  of 
control    suited    to    certain    kinds    of    industry,    but 


88  THE  LABOUR  MOVEMENT 

by  no  means  to  all.  After  all,  the  main  function 
of  the  State  in  industry  as  in  all  other  things  is 
to  be  the  supreme  regulative  authority.  Every 
lesser  community  has  its  sectional  interests,  and 
as  the  power  of  such  sections  grows  by  organisa- 
tion, the  authority  of  the  central  power  is  needed 
not  so  much  to  supersede  as  to  balance  and  har- 
monise them.  The  type  of  society  to  which  we  are 
working,  largely  under  the  impulsion  of  the  Labour 
Movement,  is  neither  Individualist  nor,  in  the 
narrower  sense,  Socialist.  The  old  self-governing 
industrial  unit  is  no  more.  As  a  mode  of  business 
organisation  it  has  given  way  to  the  Joint  Stock 
Company,  the  Amalgamation,  the  Ring.  In  rela- 
tion to  labour  the  unfettered  bargaining  of  indi- 
viduals is  yielding  to  comprehensive  arrangements 
between  Trade  Unions  and  Employers'  Federa- 
tions, and  behind  Union  and  Federation  alike  there 
arises  the  growing  authority  of  the  State.  Neither 
unlimited  freedom  of  contract  nor  the  imprescript- 
ible rights  of  property  are  any  longer  formulae 
to  which  the  legislator  must  bow.  Yet  this  is 
not  to  say  that  either  private  property  or  free 
industrial  enterprise  is  in  process  of  abolition. 
What  has  actually  been  happening  is  rather  that 
both  property  and  contract  have  come  much  more 
closely  under  the  supervision  of  the  State.  The 
State  has  not  destroyed  freedom  of  contract,  but 
it  has  imposed,  and  will  continue  to  impose,  limita- 
tions and  conditions  which  the  terms  of  the  contract 
must  observe — rules  of  the  game  intended  to  secure 
fair  play.  It  has  laid  down  that  there  are  conditions 
of  industry  which  are  injurious  to  the  common 
wellbeing  and  incompatible  with  the  common 
responsibility  for  fair  treatment  of  all  members 
of  Society.  These  conditions  it  does  not  leave 
to  Trade  Unions  to  secure  if  ihey  can  by  collective 


CO-OPERATION  89 

bargaining,  but  prescribes  them  by  law.  Such 
conditions  are  sanitation  and  safety  in  work,  the 
limitation  of  hours,  provision  for  sickness  and  acci- 
dent, and  finally  the  minimum  wage.  In  practice 
legislation  in  all  these  directions  has  at  each  step 
enforced  as  matter  of  law  that  which  was  already 
the  policy  of  the  best  employers.  In  so  doing 
it  has  levelled  up  the  bad  or  the  less  capable,  and 
has  made  it  possible  for  the  best  men  to  advance 
a  little  farther  with  their  pioneer  work.  It  is 
ver3''  seldom  that  any  work  of  this  kind  has  to  be 
undone.  It  is  justified  of  its  results,  and  it  is 
destined  to  go  farther,  until  every  form  of  employ- 
ment which  is  prejudicial  to  the  life  and  health  of 
the  employed  is  ruled  out.  But  in  all  this,  though 
the  State  is  prescribing  limitations,  it  is  by  no  means 
destroying  free  contract.  On  the  contrary,  in  so 
far  as  it  is  redressing  inequality,  it  is  rendering 
contract  free  in  a  deeper  and  more  genuine  sense 
than  before.  The  weaker  party  gains  the  protec- 
tion of  the  law,  and  can  no  longer  be  driven  into 
accepting  conditions  to  which  no  man,  unless  he 
were  driven,  would  accede.  Again,  though  it 
imposes  conditions  upon  industry,  the  State  is  by 
no  means  superseding  the  private  employer.  It 
leaves  to  him  the  initiative.  It  leaves  him.  the 
immediate  management  and  control  of  his  business. 
But  it  assumes  a  certain  right  of  supervision.  He 
is  lord,   but  the  State   is   overlord. 

Much  the  same  thing  is  happening  in  other 
directions.  Some  Socialists  have  thought  that  the 
family  would  be  merged  in  the  State.  What  is 
happening  is  rather  that  by  insisting  on  the  rights 
of  wife  and  children  the  State  is  reconstituting 
the  family  on  the  basis  of  a  deeper  and  more 
mutual  responsibility.  Destroying  the  conception 
of  the  family  as  the  property  of  the  father,   it  is 


90  THE   LABOUR  MOVEMENT 

restoring  it  as  an  association  of  persons  in  the 
full  ethical  and  legal  sense  of  that  term.  It  does 
not  destroy  parenthood,  but  it  constitutes  itself 
the  over-parent.  It  does  not  destroy  parental 
responsibility.  On  the  contrary,  legislation  on 
behalf  of  children  has  on  the  whole  tuned  up  and 
tightened  the  obligation  of  the  parent,  by  enforcing 
as  a  matter  of  law  that  which  was  formerly  a 
moral  obligation — e.g.,  in  punishing  neglect — or  by 
bringing  within  reach  of  all  that  which  was  practi- 
cally possible  only  for  the  more  fortunate— ^.g'., 
in  the  provision  of  free  education.  The  function 
of  control  is  not  to  destroy,  but  to  guide,  sustain, 
and  purify  those  family  relationships  in  which, 
after  all,  the  great  mass  of  mankind  finds  the  one 
substantial   and   abiding   source   of   happiness. 

So  again  with  property.  There  is  a  tendency 
to  national  ownership  of  certain  forms  of  property 
such  as  land  and  the  means  of  transport.  But 
apart  from  these,  the  tendency  of  the  State  is  to 
become  not  so  much  immediate  owner  as  eminent 
OAvner.  The  doctrine  that  a  man  can  do  what 
he  likes  with  his  own  is  not  so  often  heard  as  of 
old.  More  and  more  it  is  recognised  on  the  one 
hand  that  property  is  a  State  institution,  an  institu- 
tion resting  on  the  law  and  the  force  that  the 
community  maintains  at  the  back  of  the  law,  and 
on  the  other  hand  that  the  sources  of  wealth  are 
social  as  well  as  personal.  As  the  full  bearing  of 
these  principles  is  realised  it  becomes  clear  that 
the  State  must  have  a  free  hand  to  deal  with  the 
institution  of  property  in  the  common  interest,  that 
at  bottom  it  is  not  limited  by  the  rights  of  owners 
but  rather  that  owners  'hold  subject  to  the  supreme 
requirements  of  the  common  good.  As  in  feudal 
days  men  held  the  land,  not  in  absolute  ownership 
but  as  tenants  of  the  king,  and  conditionally  on  the 


CO-OPERATION  91 

discharge  of  certain  duties,  so  in  the  State  system 
which  is  gradually  emerging  out  of  individualism 
the  owner  holds  of  the  community  and  subject  to 
the  duties  which  the  community  requires.  It  is 
not  the  business  of  the  State,  as  some  of  the 
narrower  forms  of  Socialism  seem  to  suggest,  to 
get  all  property  into  its  own  hands  and  to  serve 
out  to  individuals  such  necessaries  and  comforts 
as  seem  good  to  a  committee  of  officials.  It  is 
its  business  rather  to  irnpose  such  a  use  of  property 
and  such  arrangements  of  industry  as  secure  to 
all  who  work  honestly  the  means  of  directing  their 
own  lives  on  the  lines  which  they  find  most  suit- 
able to  themselves,  and  this  it  does,  not  by  abolish- 
ing private  property,  but  rather  by  extending  to 
all  its  citizens  a  certain  lien  upon  the  common 
stock.  The  old  age  pensioner  of  to-day  differs 
from  the  pauper  of  yesterday  not  so  much  in  that 
he  has  more  food  or  better  lodging  than  he  might 
have  had  in  a  well -arranged  workhouse,  but  in 
that  he  has  a  definite  claim  on  the  public  funds 
independent  of  the  decision  of  officials^  not  entail- 
ing any  restriction  on  his  mode  of  life,  not  implying 
previous  destitution.  He  remains,  in  short,  a  free 
man,  and  free  because  he  has  secured  to  him  a 
certain  right  of  private  property  in  national  funds. 
Private  property  is  not  abolished  by  such  measures. 
On  the  contrary,  it  is  extended  to  those  who 
formerly  had  nothing  but  the  insufficient  weekly 
wage.  At  the  same  time,  it  is  limited  and  con- 
trolled. 

As  is  the  relation  of  the  State  to  the  private 
business,  to  contract,  to  the  family,  to  property, 
so  is  it  also  to  the  voluntary  organisation  as 
the  Trade  Union,  the  Co-operative  Society,  the 
Friendly  Society.  Its  true  function  is  not  to  super- 
sede but  to  supervise,  to  guide,  to  harmonise.    The 


92  THE   LABOUR  MOVEMENT 

State  is  too  big  a  body  and  its  methods  are  too 
mechanical  to  admit  of  its  dealing  directly  with 
the  endlessly  varying  needs  of  the  individual. 
Between  the  two  poles  intermediate  bodies  of  many 
kinds  and  degrees  are  needed,  and  a  wise  demo- 
cracy will  not  seek  to  destroy  such  bodies  but  to 
utilise  them.  The  Insurance  Act,  however  open  to 
criticism  in  some  points,  is  admirable  in  the  attempt 
that  it  makes  to  foster  and  to  guide  the  Friendly 
Societies  which  the  thrift  of  the  working  class  had 
already  built  up.  Similarly  if  there  is  to  be  healthy 
progress  either  in  Trade  Unionism  or  in  State 
Socialism  it  may  be  confidently  laid  downi  that 
this  must  depend,  not  on  the  victory  of  either 
principle  over  the  other,  but  on  the  growth  of 
harmonious  relations  between  the  two.  Hitherto 
these  relations  have  not  been  fortunate.  The  law 
has  been  a  step-mother  to  the  Unions,  and  in  1906 
they  revolted  from  her  control  and  established  by 
statute  their  emancipation  from  civil  process.  What 
made  the  Trade  Disputes  Act  possible  was  the 
sense  that  the  principles  of  ordinary  commercial 
law  administered  by  judges  unskilled  in  industrial 
questions  did  not  render  due  justice  to  the  special 
needs  of  organised  labour.  Yet  the  position  in 
which  the  law  is  left  is  satisfactory  neither  to  the 
Unions  nor  to  the  public.  We  may  see  in  the  new 
Industrial  Council  the  germ  of  a  better  organisa- 
tion. Compulsory  arbitration  can  only  come  into 
being  when  the  principles  of  remuneration  are 
generally  understood  and  have  become  common 
ground  to  all  parties.  But  a  panel  representing 
employers  and  employed  rather  than  a  bench  of 
judges  is  the  true  tribunal  in  labour  disputes.  Such 
a  court  might  arbitrate  on  the  incidents  of  indus- 
trial warfare— on  complaints  of  breach  of  contract, 
for  example — and  its  decisions  might  be  given  the 


CO-OPERATION  93 

force  of  law  long  before  it  will  be  possible  to 
secure  the  general  submission  of  questions  of  hours 
and  rates  to  arbitration.  What  organised  labour 
needs  is  not  emancipation  from  law,  but  from  the 
atmosphere  of  law-courts  administering  principles 
which  are  no  longer  adapted  to  industrial  con- 
ditions. 

To  discuss  these  questions  adequately  would  re- 
quire a  separate  treatise.  Here  we  are  only  con- 
cerned with  elementary  principles,  and,  to  resume, 
our  contention  is  that  it  is  the  function  of  the 
State,  not  merely  to  organise  certain  departments 
of  industry,  but  to  exercise  a  general  supervision 
of  the  conditions  of  labour,  the  regulation  of  pro- 
ductive activity,  and  the  division  of  the  fruits  of 
work  in  the  interest  of  the  community  as  a  whole, 
and  that  in  so  doing  its  object  is  not  to  displace 
or  destroy  personal  initiative,  freedom  of  choice, 
private  property,  family  life,  or  voluntary  organisa- 
tion, but  rather  to  bring  them  within  the  limits 
of  a  system  in  which  they  will  contribute,  not  to 
selfish  aggrandisement  but  to  public  ends.  The 
modern  Social  reformer  reverts  to  the  Aristotelian 
ideal  of  the  State  as  "  coming  into  being  that  men 
may  live,  but  existing  that  they  may  live  well." 


CHAPTER    IV 

THE    DISTRIBUTION    OF    WEALTH 

Let  us  now  try  to  sum  up  the  joint  economic 
result  of  the  movements  under  consideration.  We 
have  seen  that  each  is  attacking  its  appropriate 
part  of  the  problem  of  industrial  organisation. 
Let  us  now  consider  ho.w  far  they  are  naturally 
fitted  to  work  together  in  solving  the  problem 
as  a  whole.  We  shall  get  some  light  on  this 
point  if  we  examine  the  present  "  system  "  of  un- 
regulated industry  and  compare  its  main  results, 
point  by  point,  with  those  which  our  methods  of 
organisation   are   tending   to   put   in   their   place. 

In  drawing  the  broad  outlines  of  a  system  of 
private  enterprise,  such  as  on  the  whole  prevails 
in  England  at  the  present  day,  we  shall  simplify 
our  task  if  we  follow  the  ordinary  method  of  econo- 
mists, and  assume  for  the  moment  that  the  com- 
petitive system  described  is  really  a  system  of  free 
competition.  But  when  we  speak  of  competition 
as  free,  we  imply,  be  it  remembered,  a  good  deal 
more  than  absence  of  any  legal  or  other  collectively, 
imposed  restraint.  We  imply  equality  of  advant- 
age—/.£?.,  that  all  bargainers  in  the  markets  of 
the  country  are  equal  in  position  and  in  knowledge 
of  their  own  interests.  That  being  understood,  it 
will  be  seen  at  once  that  our  assumption  is  a 
large  one,  and  not  fully  realised  in  any  existing 


THE   DISTRIBUTION   OF  WEALTH       95 

state  of  society.  Certain  results  of  this  will  be 
considered  in  their  place.  Meanwhile,  it  will  be 
convenient  to  proceed  as  though  the  assumption 
were  justified,  precisely  as  in  many  problems  of 
mechanics  it  is  convenient  to  assume  that  bodies 
are  perfectly  rigid,  or  move  without  friction.  In 
this  way  we  get  certain  broad  truths  first,  and  can 
introduce  the  necessary  limitations  and  corrections 
afterwards. 

The  central  fact  of  modern  industry  is  the 
Division  of  Labour,  and  the  consequent  production 
of  goods— not  for  the  use  of  the  producers,  but— 
for  Exchange.  In  the  regulation  of  industry 
everything  depends  on  the  way  in  which  the  Ex- 
change value  of  goods  is  determined.  Think,  first, 
for  a  moment,  how  we  should  determine  Exchange 
value,  if  we  had  it  in  our  power  to  do  so,  on  the 
principles  above  determined — that  is  to  say,  with  a 
view  to  the  fair  payment  of  the  producer.  Supposing 
the  commodity  to  be  useful  to  society,'  we  should 
try  to  reward  the  producer  in  proportion  to  the 
time,  effort,  and  skill  applied  in  making  it.  And 
in  considering  the  reward  due  for  a  given  quantity 
of  time,  effort,  and  skill,  we  should  be  guided  by 
the  amount  it  would  be  possible  to  give  to  all 
workers,  so  that  the  minimum  would  suffice  for  a 
civilised  existence.  In  apportioning  our  reward, 
then,  we  should  take  into  account  the  social  utility 
of  the  product,  and  the  amount  and  character  of 
the  work  done  upon  it.  The  result  would  then  be 
that  we  should  get  what  we  wanted  done,  and  the 
producer  would  make  as  good  a  living  as  might  be 
compatible  with  the  wealth  of  society.      The  ex- 

'  From  the  point  of  view  of  abstract- justice,  this  is  obviously 
the  first  consideration.  If  my  time  and  skill  are  spent  in  devising 
an  infernal  machine  for  use  in  a  public  building,  my  just  reward 
is  penal  servitude. 


96  THE   LABOUR  MOVEMENT 

change  value  of  the  goods  as  reckoned  in  money- 
would  have  to  suffice  to  cover  this  reward,  and,  as 
we  shall  see  presently,  to  leave  a  certain  surplus. 

I  Turning  to  the  actual  effect  of  competition, 
we  find  first  that  the  value  of  things  as  estimated  in 
money  is  continually  fluctuating,  and  that  when 
we  ask  what  is  the  normal  value  of  a  thing  and 
how  is  it  fixed,  we  must  make  it  clear  whether 
we  are  referring  to  short  or  long  periods.'  Con- 
sider a  "  market  "  for  a  day,  and  you  find  very 
likely  that  prices  are  different  in  different  places 
or  at  different  hours.  But  you  can  strike  an 
average  and  call  it  the  normal  price  for  the  day — 
some  prices  being  higher  and  some  lower  than  the 
normal.  Take  the  same  market  for  a  week,  and 
you  will  find  prices  differ  from  day  to  day.  The 
average  price  of  Monday  may  be  higher  or  lower 
than  the  average  for  Tuesday.  But  you  can,  of 
course,  strike  an  average  for  the  week  as 
a  whole,  and  speak  of  the  prices  for  each  day 
as  above  or  below,  as  "  fluctuating  round  "  the 
normal  level  for  the  week.  In  the  same  way  the 
week's  average  fluctuates  about  the  normal  level 
for  the  year  and  so  on  for  any  period,  as  Professor 
Marshall  has  ably  shown.  When  we  speak  of  the 
normal  price  of  a  commodity  we  mean  the  average 
price  for  the  period  we  are  considering,  whether 
that  period  be  short  or  long. 

Consider  first  a  short  period.  There  is  a  certain 
quantity  of  goods   in  a  market,^  and  an  effective 

'  In  what  follows  I  am  guided  mainly  by  Professor  Marshall, 
whose  account  is  the  most  comprehensive.  But  it  will  be  at  once 
understood  that  I  am  not  attempting  even  to  sketch  a  theory  of 
value  as  a  whole.  I  wish  merely  to  bring  out  certain  points 
with  regard  to  exchange  which  explain  some  of  the  obvious 
evils  of  our  industrial  system. 

'^  We  need  not  here  complicate  the  question  by  referring  to 
expected  goods. 


THE   DISTRIBUTION   OF  WEALTH       97 

demand  for  a  certain  quantity  on  the  part  of  the 
purchasers  in  the  market  taken  as  a  whole.  No 
one  can  calculate  either  quantity  precisely,  though 
an  acute  dealer  can  make  a  good  guess.  But, 
what  is  important,  the  extent  of  the  demand  may 
vary  with  the  price  of  the  goods.  The  third-class 
carriage  is  crowded  while  the  first  is  nearly  empty. 
More  people  will  be  likely  to  buy  fresh  sole  at  is. 
than  at  is.  6d.  the  pound.'  Now  if  you  can  sell 
off  all  your  fish  at  is.  6d.  you  will  do  so,  and  I, 
who  cannot  afford  to  go  beyond  is.,  will  go  with- 
out.' But  if  you  cannot  find  purchasers  who  will 
take  off  all  your  fish  at  is.  6d.,  it  will  pay  you 
to  lower  the  price.  If  all  your  fish  goes  off  at 
IS.,  you  get  more  in  the  long  run  than  if  you  sell 
half  at  IS.  6d.  You  have  to  consider  this,  and 
your  aim  being  to  get  the  maximum  return,  you  will 
all  the  time  be  feeling  after  a  price  at  which  you 
will  get  off  so  much  that  multiplying  price  into 
quantity  your  takings  are  greater  than  they  would 
be  at  any  other  price.  Suppose  this  price  to  be 
IS.  3d., I  then  IS.  3d.  will  be  an  equilibrium  point 
to  which  the  price  will  be  constantly  tending, 
though  it  may  never  reach  it. 

Now,  the  important  point  to  notice  is  that  the 
price  thus  fixed  by  the  equilibrium  of  demand  and 
supply  bears  no  relation  whatever  to  the  cost  of 
production.  One  man,  favoured  by  circumstances 
or  by  ability,  may  find  his  fish  cost  him  only 
,9d.  per  lb.  to  bring  into  the  market,  and,  accord- 
ingly, he  takes  a  profit  of  6d.  on  the  price  of 
IS.    3d.— roughly,    66    per    cent,    on    his    outlay. 

'  Suppose,  e.g.,  you  can  sell  60  lb.  at  is.  3d.  your  total  return 
is  £2,  15s.,  and  suppose  you  could  only  get  off  40  lb.  at  is.  6d. 
you  could  get  only  £3  at  that  price,  while  again  70  lb.  at  is. 
gives  you  ;£3  los.  In  such  a  condition  of  the  market — assuming 
that  you  have  60  lb.  or  more  on  your  hands — is.  3d.  gives  you 
the  best  return. 

7 


98  THE   LABOUR  MOVEMENT 

Another,  by  ill-luck  or  niismanagement,  finds  it 
costs  him  2s.  to  bring  the  selfsame  fish  to  the 
selfsame  market,  and  his  time,  labour,  and  anxiety 
are  rewarded  by  a  loss  of  some  37  per  cent,  on  his 
transaction.  Nevertheless,  notice,  he  will  not  be 
able  to  sell  one  penny  higher  than  his  neighbour, 
or,  if  he  does,  he  will  only  lose  the  more,  suppos- 
ing  IS.   3d.   to  be  the  equilibrium  price. 

Now,  the  question  is,  What  is  to  become  of  this 
man,  supposing  his  ill-luck  or  mismanagement  to 
continue?  It  is  clear  that  he  must  eventually  go 
under  water,  and  that  the  longer  he  struggles  the 
worse  off  he  will  be.  Now,  this  introduces  us  to 
the  determination  of  long-period  values.  For  the 
disappearance  of  the  unsuccessful  competitors 
diminishes  the  quantity  of  goods  in  the  market,  and 
given  the  same  demand  as  before  with  a  decreased 
supply,  the  equilibrium  price  will  rise.'  It  is  clear, 
then,  that,  in  the  long  run,  taking  an  average  of 
prices  extending  over  a  sufficient  time  to  cause 
an  extension  of  production  when  the  market  is 
good  or  a  contraction  of  it  when  bad,  this  average 
will  be  sufficient  to  compensate  every  producer 
in  the  market  for  his  expenditure  of  time,  trouble, 
capital,  and  the  like.  The  average  price  over  a 
long  period  tends,  then,  to  equal  the  cost  of  pro- 
duction. But  we  have  seen  that  the  cost  of  produc- 
tion differs  for  each  producer.  A  and  B  are  both 
farmers.  A  is  an  able  man,  farming  rich  land 
near  a  great  town,  B  a  bad  farmer  on  poor  soil 
at  a  considerable  distance.  But  the  state  of 
demand  is  such  as  to  require  all  B's  corn  as  well 
as  A's.     Then  if  this  state  of  things  is  to  continue 

'  For  if  I  have  only  40  lb.  to  sell,  and  if  as  before  I  can  find 
buyers  for  40  lb.  at  is.  6d.,  then  is.  6d.  gives  me  a  better  return 
than  IS.  3d.  (viz.,  ;^3  instead  of  £2  ids.)  It  may  even  pay  to 
raise  the  price  further,  as  if  I  can  find  35  buyers  at  2s. 


THE  DISTRIBUTION  OF  WEALTH       99 

permanently  the  price  of  corn  must  be  sufficient  to 
remunerate  B—i.e.,  to  allow  B  to  pay  the  average 
rate  to  his  labourers  and  to  receive  the  average 
rate  of  interest  on  his  capital,  and  the  average 
return  for  his  own  risk,  anxiety,  management,  and 
the  like — the  average  in  each  case  being  deter- 
mined by  relation  to  the  rate  obtainable  in  other 
occupations  open  to  men  of  the  stamp  of  B.  But 
it  is  clear  that  if  the  price  is  thus  high  enough 
to  give  an  average  reward  to  B,  it  will  give  some- 
thing very  much  above  the  average  to  A — unless, 
indeed,  A  has  already  had  to  pay  a  landlord  or 
the  community  for  the  privilege  of  farming  rich 
land  in  a  good  situation.  In  this  case  the  surplus 
that  goes  primarily  to  A  will  ultimately  find  its 
way  into  other  pockets.  But  notice  first  that  price 
is  thus  determined  (on  the  average  of  a  long 
period)  by  the  cost  of  producing  that  part  of  the 
commodities  sold  which  are  brought  to  market 
under  the  greatest  disadvantages.  These  goods 
being,  as  it  were,  on  the  margin  of  the  market,  so 
that  a  further  fall  in  price  would  exclude  them 
from  it,  they  are  spoken  of  as  on  the  margin  of 
production,!  and  the  cost  of  producing  them  is 
the  marginal  cost  of  production  for  that  market. 
This  being  understood,  it  holds  that  when  men  are 
very  wise  in  their  own  interests  and  competition 
very  free,  the  average  cost  of  a  commodity  in 
a  long  period  will  tend  to  coincide  with  the 
marginal  cost  of  production.  Notice,  secondly, 
that  this  being  so,  a  surplus  remains  over  to  every 
producer  except  those  on  the  margin — the  surplus 
which,  in  our  instance,  was  left  to  farmer  A  by 
the  price  which  just  satisfied  farmer  B.  The  exist- 
ence of  this  surplus  depending  on  the  inequalities 

'  The  phrase  was,  of  course,  suggested  by  land  supposed  to 
be  physically  on  the  margin  of  cultivation. 


100  THE   LABOUR  MOVEMENT 

in  human  and  non-human  nature,  it  must  remain 
in  being  as  long  as  human  industry  persists. 
Its  existence  is  not  one  of  the  hypothetical  laws  of 
political  economy,  but  one  of  its  categorical  or 
unconditional  generalisations.  But  the  disposal  of 
the  surplus  is  a  very  different  matter,  depending 
very  largely  on  human  institutions. 

We  have  now  before  us  two  main  elements  in 
the  returns  which  a  farmer  or  manufacturer  gets 
for  his  labour.  A  certain  portion  of  the  return 
reimburses  him  for  the  cost  of  producing  his 
article.  Another  portion,  which  may  vary  from 
zero  I  to  any  quantity,  is  a  surplus  over  and  above 
the  cost  of  production.  We  must  consider,  then, 
the  elements  which  make  up  both  these  divisions 
of  the  return.  To  do  this  fully  would  be  to  write 
a  book  on  political  economy.  But  consider  for  a 
moment  very  briefly  what  goes  to  build  up  Jie 
cost  of  producing  an  article.  We  may  distinguish 
the  elements  of  ordinary  manual  labour  and  of 
skilled  labour.  The  price  of  these,  it  must  be 
remembered,  is  determined,  not  immediately  by  the 
value  of  their  product  but  rather  by  the  bargain 
that  their  possessors  are  able  to  make,  as  to  which 
more  will  have  to  be  said.  Next  come  earnings 
of  management,  and  under  them  we  must  include, 
not  only  salaries  paid  to  clerks,  foremen,  over- 
lookers, or  managers,  but  a  sufficient  recompense 
to  the  employer  himself  for  his  trouble  and  anxiety. 
A  man  of  capital  will  not  permanently  occupy, 
himself  in  a  business  which  gives  him  no  return 
for  his  trouble  beyond  what  he  could  safely  get 
for  his  capital  if  invested  in  something  else.  This 
brings  us  to  the  last  element  in  cost — viz.,  interest 
on    the    capital    employed.      Now,    of    all    these 

•  Or  as  I  shall  notice  presently  from  a  minus  quantity. 


THE    DISTRIBUTION   OF  WEALTH     101 

elements  there  is  a  certain  average  which  goes  to 
determine  the  marginal  cQst  ,  of  production,  and 
through  it  the  average -price '.  of  .the  commodity. 
In  the  long  run,  probably  the.  prjce^  ol  ^hese  ele- 
ments determines  that  of 'the'cdmmD'dlty  and  not 
vice  versa.  Some  of  them  act  more  slowly  than 
others,  and  all  act  clumsily  and  roughly,  but 
all  probably  act  in  the  long  run.  It  is  different 
when  we  turn  to  the  surplus  left  to  each  producer. 
Here  we  have  to  do  with  rewards  determined  by 
price  and  not  determining  it.  It  is  sometimes 
difficult  to  say  what  earns  these  rewards.  Some- 
times they  seem  due  to  pure  luck.  Others  depend 
on  the  special  abilities  or  sagacity  of  a  captain 
of  industry.  Others  on  the  monopoly  of  an  inven- 
tion. Others  on  a  State-created  monopoly.  Others, 
again,  on  situation.  We  may,  however,  distinguish 
the  persons  who  receive  the  surplus.  One  in 
general  is  the  ground  landlord  on  whose  land  the 
undertaking  is  carried  on,  and  as  situation  is  an 
important  factor  in  success^  ground  rents,  whether 
in  country  i  or  town,  take  up  an  important  part  of 
the  surplus.  The  other  recipient  is  in  general  the 
entrepreneur,  who  undertakes  the  risk  of  the  enter- 
prise. When  rent  is  paid  he  takes  the  balance,  and 
this  balance  is  profit  proper.  But,  of  course,  entre- 
preneur and  landlord  may  be  one  individual  (as  in 
the  case  of  a  peasant  proprietor),  or  there  may 
be  many  recipients,  as  in  some  profit-sharing 
schemes.  And  it  is  important  to  notice  that  some 
factors  in  the  production  of  the  surplus  are  tan- 
gible, their  value  measurable,  and  the  returns  to 
them  nearly  constant.  Such,  for  instance,  is  situa- 
tion.     These    are    the    factors    which    can    be    let 

'  In  the  country  of  course  the  value  of  the  land,  and  hence  the 
rent,  depends  largely  on  previous  investments  of  capital  in 
the  soil. 


102  THE   LABOUR  MOVEMENT 

off  and  secure  a  rent.  Other  factors,  like  keen 
business,  sagacity,  are  less  easy  to  measure,  and 
get  a  variable  re-tuin.  Generally  they  induce  a 
man  to,  u^dqrtake  business  en  his  own  account  and 
their  reward,  .is  profit.  B.ut  they  may  also  be  sold 
by  their  possessor  to  the  conductor  of  a  business 
for  a  special  salary  or  for  a  share  in  the  profits. 
This  distinction  is  of  practical  importance  when  any 
attempt  is  made  to  control  the  distribution  of  the 
surplus. 

For  the  average  producer,  then,  the  returns  of 
his  industry  may  be  theoretically  divided  into  two 
portions,  that  which  reimburses  the  expenses  of 
production  and  a  surplus  over  and  above,  varying 
in  amount.  This  division,  we  have  seen,  is  in- 
dependent of  human  institutions,  though  human 
institutions  may  determine  who  shall  receive  it.  In 
one  way  human  institutions  or  efforts  also  affect 
the  amount  of  the  surplus.  Not  only  may  they 
increase  or  decrease  the  productivity  of  labour, 
but  they  affect  the  cost  of  production.  For 
example,  if  interest  is  lowered  by  general  pro- 
gress and  social  security,  one  element  in  the  cost 
of  production  is  reduced  and  it  tends  to  fall,  leav- 
ing an  increased  producer's  surplus  for  the  entre- 
preneur, landlord,  or  other  recipient.  Conversely, 
a  rise  in  the  price  of  any  of  the  elements  determin- 
ing cost  of  production  tends  to  raise  that  cost  and 
lower  the  surplus.  In  this  way  only,  it  appears, 
can  alterations  in  the  supply  prices  of  any  general 
agents  of  production  affect  the  quantity  of  the 
producer's  surplus. 

Having  thus  briefly  sketched  the  effect  of  free 
competition  on  the  distribution  of  wealth,  let  us 
consider  how  it  affeccs  the  welfare  of  society.  We 
have  seen  that  the  two  first  essentials  of  a 
thoroughly  economical  system  of  production  would 


THE   DISTRIBUTION   OF  WEALTH     103 

be  that  only  good  and  useful  commodities  should 
be  produced,  and  that  all  the  producers  of  such 
commodities  should  be  remunerated  at  a  suitable 
rate — the  elements  for  determining  which  we  dis- 
cussed in  Chapter  II.  Now,  at  first  sight,  it  would 
appear  that  both  these  conditions  are  satisfied  by 
the  competitive  system.  To  begin  with,  under 
such  a  system,  nothing  can  be  repeatedly  and 
continually  produced  in  excess  of  the  demand  for 
it.  The  actual  consumers,  it  would  appear,  call 
forth  and  regulate  the  supply,  and  each  man  being 
the  best  judge  of  his  own  interests,  who  can  be 
so  fit  to  determine  how  many  shoes  are  to  be 
made  as  those  who  are  going  to  wear  them?  In 
the  second  place,  the  price  of  an  article  cannot 
permanently  fall  short  of  the  cost  of  production  ; 
that  is,  it  must  be  at  least  enough  to  give  a 
"  fair  "  rate  of  remuneration  to  all  parties  engaged 
in  producing  it,  and  that,  be  it  remembered,  to 
the  parties  who  produce  it  under  the  greatest 
possible  disadvantages,  our  generous  system  leav- 
ing an  ample  surplus  to  more  favoured  or  gifted 
individuals. 

So  much  for  the  credit  account.  What  of  the 
per  contral  Take  first  the  correlation  of  Demand 
and  Supply  on  which  all  hinges.  The  salient  fact 
here  is  that  this  correlation  is  effected  indirectly 
and  almost  unconsciously.  There  are  few  things 
more  capricious  and  incalculable  than  the  modern 
market.  Cotton  is  "  flat  "  and  wool  is  "  brisk," 
and  few  men  fathom  the  ultimate  causes,  which 
may  arise  from  changes  on  the  other  side  of  the 
globe.  Shrewd  men  make  a  guess.  Cunning 
men  suck  no  small  advantage  out  of  the  turns  of 
the  market.  But  the  majority  even  among  the 
experts  are  like  men  groping  in  the  dark,  who 
know  the  road  to  be  clear  as  far  as  the  hand  can 


104  THE   LABOUR  MOVEMENT 

reach,  but  can  never  tell  what  blank  wall  they 
may  not  touch  at  any  step.  The  truth  is,  that 
though  demand  ultimately  governs  supply,  it  has 
to  use  very  indirect  means,  and  very  rough  means. 
To  use  an  old  comparison,  it  is  like  a  force  working 
under  a  great  deal  of  friction.  The  individualist 
producer  of  old  days  was  a  market  to  himself." 
He  lived,  as  it  were,  apart,  not  only  "  Cyclops- 
wise,  governing  wife  and  children,"  but  also  in 
true  Cyclops  fashion,  producing  just  his  own  needs. 
He  delved  and  his  wife  span  as  they  required. 
They  knew  what  they  wanted,  and  procured  it  by 
their  toil,  and  they  had  the  fruits  of  their  toil  as 
its  reward.  A  very  uneconomical  system  of 
industry  from  the  point  of  view  of  production,  but 
presenting  some  m^erits  from  that  of  distribution. 
In  modern  industry  we  have  changed  all  that. 
The  modern  individualist  producer  sows  that 
another  may  reap,  and  that  whether  he  is  wage- 
earner  or  employer.  The  essence  of  the  modern 
system,  of  which  Exchange  is  the  central  feature, 
is  that  I  produce  what  I  think  you  will  buy  at  an 
advantage  to  myself.  .Whether  I  am  a  farmer, 
merchant,  millowner,  or  shopkeeper,  the  same 
holds.  You  do  not  set  me  to  work,  but  I  set  to 
work  myself  in  the  hope  that  you  will  want  what 
I  make. 2  Meanwhile  others  are  setting  to  work 
in  the  same  way.  Now,  if  I  have  made  a  good 
guess  at  what  you  want,  I  make  a  large  profit  ; 
if  a  bad  one,  I  may  be  ruined.  In  the  first  case, 
too  little  of  the  desired  commodity  is  being  pro- 
duced ;    in  the  second,  too  much.     In  either  case 

'  If  he  is  not  altogether  an  economic  figment.  It  is  truer  to 
economic  history  to  think  of  a  small  community  tlian  of  a  single 
family  as  very  nearly  self-sufficing. 

=  Of  course  at  any  one  stage  goods  are  in  large  measure  made  to 
order.  But  the  stock  is  accumulated  in  anticipation  of  orders 
to  come. 


THE   DISTRIBUTION  OF  WEALTH     105 

the  discrepancy  from  the  required  amount  tends 
to  right  itself,  but  in  the  meanwhile  one  set  of 
men  are  ruined  while  others  retire  with  a  fortune. 
This  is  the  nature  of  the  friction  under  which  com- 
petition acts  in  adjusting  supply  to  demand.  Men's 
lives  are  the  brake  upon  the  wheel. 

Let  us  consider  this  in  close  connection  with  the 
theory  of  value.  We  have  seen  that  for  short 
periods  value  is  determined  by  the  equilibrium  of 
demand  and  supply  and  has  no  connection  with 
cost  of  production.  We  have  seen  that  the  price 
thus  fixed  may  be  too  low  to  remunerate  certain 
of  the  producers,  and  that  in  the  long  run  these 
will  retire  from  the  market.  But  at  what  time  and 
at  what  cost?  If  the  operation  of  competition  were 
swift  and  decisive,  we  should  have  little  to  charge 
against  it  on  this  count,  but  the  "  long  period  " 
in  question  may  extend  over  years,  during  which 
time  a  w^hole  trade  is  disorganised,  employers  are 
contending  miserably  with  forces  that  are  too 
strong  for  them,  and  wage -earners  are  pinched. 
See  how  this  works  out.  The  price  of  an  article 
is  fixed  for  a  short  period,  say  three  months,  by 
the  equilibration  of  demand  and  supply  at  a  price 
which  does  not  remunerate  a  millowner.  If  he 
could  at  once  contract  his  production  or  close  his 
mill  and  transfer  his  capital  elsewhere,  all  would 
work  well.  Supply  would  fall  oft  to  the  required 
amount,  and  the  remaining  members  of  the  trade 
would  receive  a  good  profit.  But  he  is  not  in  a 
position  to  do  anything  of  the  sort.  His  capital 
is  locked  up.  He  has  acquired  certain  special 
business  aptitudes  and  a  certain  connection.  You 
cannot  turn  a  cotton  manufacturer  into  a  farmer, 
nor  a  cotton -mill  into  a  coalmine.  When  you  are 
able  to  do  that,  competition  will  begin  to  work 
without  friction. 


106  THE   LABOUR   MOVEMENT 

Yet  this   is  not  the   only   difficulty.      Over-pro- 
duction in  one  industry  is  not  balanced  as  might 
be     expected    by     under-production     in     another. 
Rather,   as   hinted   above,   there   is   a   tendency   to 
over-production  all   round.      It   is   the   interest  pi 
each  single  employer  to  work  his  particular  plant 
to    the    utmost    and    get    for    himself    the    largest 
possible  share  of  the  market.     Hence  all  employers 
are    constantly    pressing    forward    and    increasing 
production.     The  consequence  is  that  after  a  time 
prices   tend  to   fall.'      If   employers   were   merely 
exchanging    against    one    another,    this   would   not 
matter.     As  they  sold  cheap  they  would  also  buy 
cheap.     But,  in  fact,  while  their  selling  prices  fall 
their  costs  are  fixed  in  two  directions.     They  are 
working   in   large   part   on    borrowed   capital   and 
the  rate  of  interest  is  fixed.     It  does  not  diminish 
because   selling  price   has   diminished.      In   many 
cases,  too,  their  premises  are  rented  and  the  rent 
is  similarly  fixed.    At  the  same  time,  trade  unions 
resist    a    reduction    of    money    wages.     Thus    em- 
ployers have  the  same  fixed  charges  to  meet  with 
a  diminishing  income.     But  further,  it  is  probable 
that  the  general  lowering  of  prices  does  not  extend 
so    rapidly   to    raw   material    as    to    manufactured 
goods.      The   increase   of  manufacture  and   trans- 
port will  increase  the  demand  for  coal,   but  with 
a  given  number  of  mines  open  the  supply  of  coal 
will  not  readily  expand  except  at  increased  cost. 
Other  raw  materials  are  affected  in  the  same  way, 
and  food  supplies,   cotton,  &c.,  are   independently 
affected   by   good    and    bad    harvests.      Thus    the 
manufacturer  may  find  that  his  raw  materials  are 

'  Unless,  indeed,  there  should  be  a  corresponding  increase  in 
the  output  of  gold.  But  as  this  output  is  regulated  mainly  by 
the  richness  of  available  mines  it  does  not  vary  concomitantly 
with  the  general  expansion  or  contraction  of  trade. 


THE   DISTRIBUTION   OF  WEALTH     107 

costing  him  the  same,  and  his  fixed  charges  are 
the  same,  while  his  selling  price  has  descended, 
and  this  may  hold  right  through  the  area  of  pro- 
duction.! 

The  result  is  that  he  will  make  a  desperate 
effort  to  struggle  on.  Not  only  so,  but  he  may 
resort  to  desperate  expedients,  endeavouring  to 
make  up  for  diminished  prices  by  increasing  his 
output,  or  to  attract  customers  by  underselling. 
Each  step  plunges  him  deeper  into  the  mire.  In 
both  ways  he  still  further  diminishes  the  price 
of  the  article  and  he  plunges  others  into  the  same 
difficulties.  The  struggle  may,  if  the  gods  are 
merciful,  be  short  and  sharp,  and  in  that  case  ruin 
and  bankruptcy  follow  at  once.  Rich  men  lose 
everything  ;  large  stocks  of  machinery  and  costly 
buildings  become  worthless,  hundreds  of  workmen 
are  turned  out  into  the  street.  Yet  nobody  really 
was  in  fault.  The  crisis  is  worse  the  further  it  is 
prolonged,  for  it  means  years  of  depression  pi 
trade,  irregularity  of  employment,  falling  wages, 
and  vanishing  profits.  Such  is  the  "  friction  " 
which  attends   the   working  of  competition. 

When  enough  stoppages  have  occurred  the  sup- 
plies in  the  market  diminish.  Prices  of  manu- 
factured goods  rise  again.  Coal  and  materials  are 
abundant  for  the  reduced  production,  and  there- 
fore relatively  cheap.  The  crisis  has  produced  a 
break  in  money-wages.  There  is  a  good  margin. 
Works  are  presently  going  full  time,  and  the  whole 
process  begins  anew.  Such  in  outline  seems  to  be 
the   nature    of    periodical    unemployment,    the    re- 

'  The  only  thing  that  can  right  him  is  an  inci^eased  supply  of 
gold  which  will  keep  prices  high.  This  is  to  the  advantage  of 
the  employer,  as  against  the  capitalist,  the  landlord,  and  the 
salaried  official.  The  effect  on  the  workman  depends  on  the 
elasticity  with  which  money  wages  respond  to  increased  cost 
of  living. 


108  THE   LABOUR  MOVEMENT 

current  sore  of  the  body  economic,  the  effect  in 
the  last  resort  of  the  lack  of  all  means  of  regu- 
lating industry  and  adjusting  supply  equably  to 
demand. 

If,  then,  we  were  responsible  for  the  deliberate 
regulation  of  industry,  we  should  need,  to  begin 
with,  to  take  some  measures  for  adjusting  pro- 
duction to  requirements.  We  should  have  to  fore- 
cast the  quantity  of  goods  likely  to  be  required 
in  an  industry  as  a  whole  and  to  regulate  our 
capital  expenditure,  our  organisation,  and  the 
supply  of  labour  accordingly.  Further,  if  the  ex- 
change of  goods  through  the  medium  of  money 
remained  a  part  of  our  system,  we  should  have  to 
fix  the  price  of  goods  in  any  given  branch  of 
industry  at  the  point  which  would  repay  the  cost 
of  those  goods  which  it  was  most  expensive  to 
produce,  leaving  a  surplus  of  varying  and  in  some 
cases  probably  of  very  considerable  amount  on  the 
sale  of  that  portion  of  the  stock  which  was  more 
economically  produced.  The  surplus,  it  would  be 
seen,  would  remain  even  if  we  transformed  industry 
from  an  individualist  to  a  completely  Socialist 
basis.  We  shall  return  to  this  point  presently. 
But  we  have  first  to  note  certain  further  defects 
in  the  competitive  system. 

Let  us  suppose  the  marginal  cost  of  production 
determined  and  maintained  without  fluctuation  by 
competition  so  that  the  losses  attendant  on  fluctu- 
ation may  be  put  out  of  mind  for  the  moment. 
Will  everything  then  go  smoothly?  Cost  of  pro- 
duction, remember,  includes  the  elements  of  wages 
for  labour,  skill,  and  management  ;  the  compensa- 
tion for  risk  and  the  interest  on  capital.  Now, 
will  the  cost  of  production  be  fixed  at  a  rate  which 
will  provide  due  remuneration  for  all  of  these? 
And,  again,  supposing  this  condition  satisfied,  will 


THE    DISTRIBUTION  OF  WEALTH     109 

the  competition  of  these  several  factors  for  their 
portion  of  the  price  distribute  it  in  the  justest 
way — that  is,  in  the  way  most  useful  to  the  com- 
munity? Not  to  go  into  the  full  theory  of  this 
aspect  of  distribution,  consider  the  operation  of 
unrestricted  self-interest  on  one  factor  in  the  cost 
of  production,  the  wages  of  labour,  and  contrast 
it  with  the  effect  of  combination  already  con- 
sidered. To  understand  this  we  must,  as  in 
Chapter  II.,  regard  Labour  as  a  commodity  which 
the  labourers  possess  and  are  ready  to  sell  to 
the  highest  bidder.  Now,  supposing  the  labourer 
and  the  employer  to  arrange  terms  by  unrestricted 
personal  bargaining,  wages  will  be  fixed  for  short 
periods  by  the  equilibrium  of  demand  and  supply. 
And  we  saw  that  in  the  case  of  material  commo- 
dities the  equilibrium  price  bore  no  relation  to 
cost  of  production,  and  might  leave  the  pro- 
ducer in  a  bad  plight.  So  it  is  with  wages. 
The  market  price  for  short  periods  bears  very 
little  relation  '  to  the  needs  and  comforts  of  the 
labourer  who  sells  his  work  and  may  leave  him  in 
very  bad  plight.  In  practice  the  iron  rule  of 
demand  and  supply  is  mitigated  in  the  case  of 
wages,  not  only  by  combinations  but  by  custom 
and  in  some  degree  by  goodwill.  On  the  other 
side  we  have  to  reckon  with  the  vast  economic 
advantage  which  the  great  majority  of  employers 
have  over  average  unorganised  labourers,  an  ad- 

^  The  labourer  if  denuded  of  all  other  resources  must  even 
for  a  week  earn  enough  to  feed  him.  But  if,  e.g.,  the  worker 
is  a  girl  who  lives  at  home  and  works  for  pocket  money  or  to 
add  something  to  the  family  earnings,  her  wages  need  not,  and, 
in  fact,  often  do  not,  so  much  as  cover  this  bare  minimum.  An 
industry  in  which  wages  are  beaten  down  to  such  a  point  that 
its  operatives  can  only  be  supported  out  of  the  proceeds  of  wages 
earned  in  some  other  occupation  has  been  well  called  by  Mr. 
and  Mrs.  Webb  a  parasitic  industry.  It  is  in  effect  living  on 
others  and  as  such  ought  not  to  be  tolerated. 


no  THE   LABOUR  MOVEMENT 

vantage  parallel  to  those  of  a  horsedealer  over  a 
tyro,  and  enabling  the  employer  as  a  rule  to  buy 
labour  very  much  cheaper  than  would  be  possible 
if  the  labourer  were  equally  able  to  forecast  the 
market  and  to  await  a  favourable  turn.  This  acts 
as  a  permanent  force  depressing  the  rate  of  wages, 
and  we  have,  in  short,  one  of  the  most  important 
cases  in  which  "  free  "  competition  as  above 
defined  is  a  delusion.  And  now  notice  further  two 
peculiarities  about  labour  as  a  marketable  com- 
modity. First  the  long  period  in  which  its  price  is 
adjusted  to  the  "  cost  of  producing  it  "  is  abnor- 
mally long.  A  low  rate  of  wage  in  a  giyen  trade 
tends  to  discourage  the  supply  of  labour  for  that 
trade,  but  if  the  low  rate  be  spread  over  many 
trades  or  all  the  trades  of  a  country,  the  tendency 
could  only  operate  by  the  actual  diminution  of  the 
working  population,  partly  by  discouragement  of 
marriage,  more  by  emigration,  and  most  of  all  by 
increased  mortality,  especially  among  young 
children.  This,  of  course,  is  simply  a  form  of 
economic  friction.  The  point  at  present,  however, 
is  that  the  tendency  would  take  nearly  a  generation 
to  work  itself  out.  But  meanwhile  a  second  im- 
portant peculiarity  of  labour  as  a  marketable  com- 
modity has  been  manifesting  itself,  viz.,  the  effect, 
already  insisted  on,  of  wages  on  the  efficiency  of 
the  labourer. 

Confining  ourselves  to  the  economic  aspect  of 
this  effect,  we  shall  find  that  the  productivity  of 
labour  is  diminished  by  every  drain  upon  the 
labourer's  strength  due  to  insufficient  food,  bad 
housing,  or  unhealthy  occupations.  And  the  pro- 
ductivity of  labour  is  one  factor  in  determining  its 
reward,  inasmuch  as  it  determines  the  total  of 
which  labour  receives  a  portion.  Hence  decreased 
productivity  tends   to   further   decrease   of   wages, 


THE   DISTRIBUTION   OF  WEALTH     111 

and  we  have,  in  fine,  one  of  those  cases  of  cumu- 
lative action  to  which  Professor  Marshall  has  care- 
fully drawn  attention.  Observe  :  a  low  rate  of 
wages  diminishes  the  productivity  of  labour  ; 
diminished  productivity  tends  in  turn  to  lower 
wages,  and  so  on,  in  a  vicious  circle.  Conversely, 
increased  wages  and  increased  productivity  tend  to 
augment  one  another,  and  so  on,  in  a  circle  of 
hope.  Economic  injuries,  as  General  Walker  has 
shown  us,  tend  to  perpetuate  themselves,  and  the 
same  may  be  said  of  economic  gains.  The  result  ' 
is  that  under  a  competitive  system  the  wages  of 
labour  do  not  necessarily  right  themselves  at  all. 
Supply  will,  indeed,  slowly  tend  to  adjust  itself 
to  demand,  but,  to  say  nothing  of  the  bloodshed 
by  the  way,  //  the  labourer's  remuneration  is  below 
the  minimum  necessary  to  a  certain  development 
in  mind  and  body,  the  tendency  of  free  competition 
will  be,  not  to  raise  him  to  a  level  with  that  mini- 
mum, but  to  depress  him  farther  below  it.  The 
equilibrium  wage  will  sink.  I  conclude,  then,  that 
while  it  is  of  the  last  importance  that  the  mass 
of  workers  should  have  a  sufficiency  for  health  of 
mind  and  body,  there  is  no  necessary  tendency  in 
the  action  of  competition  to  assign  them  such  a 
sufficiency  ;  and  we  have  seen  that  it  does  not,  in 
fact,  assign  a  sufficiency  to  a  third,  perhaps  not 
to  one  half,  of  the  workers  in  the  United  Kingdom' 
to-day. 

For  these  deficiencies  of  free  competition  we 
have  already  discussed  the  remedy.  The  grand 
cause  depressing  "  free  labour  "  is  here  seen  to 
be  the  economic  weakness  of  the  labourer  himself, 
and  it  is  precisely  this  that  Trade  Unionism  and 
labour  legislation  strive  to  correct.  The  more 
clearly  it  is  seen  that  industrial  anarchy  tends  to 
depress  great  masses  of  the  workers  and  exclude 


112  THE  LABOUR  MOVEMENT 

them  from  their  due  reward  as  servants  of  society 
the  greater  is  the  need  for  the  collective  control  of 
work  and  wages. 

Now,  supposing  the  rate  of  remuneration  fixed  ; 
supposing  that  workers  of  every  class  have  ob- 
tained for  themselves  a  "  fair  "  average  remuner- 
ation, taking  into  account,  in  accordance  with  our 
original  principles,  not  only  the  necessaries  of  life, 
but  also  the  claims  of  effort,  skill,  and  brain 
power  ;  supposing,  therefore,  that  the  employing 
class  has  also  fixed  a  "  fair  "  average  wage  for 
itself— there  will  still  be  a  considerable  surplus 
of  wealth  to  consider,  not  absorbed  by  the  payment 
of  wages. 

The  first  element  'in  the  surplus  is  profit  proper, 
and  consists  in  what  Professor  Marshall  has  called 
the   quasi-Rent   of   commercial   ability   and  mono- 
poly, to  which  we  should  add  good  fortune.     We 
have  seen  that  the  individualist  employer  after  pay- 
ing  labour,    rent,   and   interest,    in   return   for   the 
hard  work  of  management  may  or  may  not  find 
himself  in  possession  of  a  surplus,  large  or  small. 
This  surplus  depends  partly  on  his  skill  and  effort, 
partly  on  circumstances  over  which  he  exercises  very 
slight   control.      It   actually  varies    in   amount,    as 
we  have  seen,   from  zero   to  any  quantity.      It   is 
the    "  fringe  "    of    the    national    dividend    where 
expansion  and  contraction  have  their  first  effects. 
If  we  could  bring  together  all  the  industries  of  the 
country  into   a  single   account,   this   fringe   would 
take  the  form  of  a  very  large  surplus  ;    if,  how- 
ever,  we   conceive   the   industrial   management   of 
the  country  to  remain  in  its  present  condition,  the 
"  fringe  "  will  present   itself  as   though  cut  very 
irregularly  along  the  surface  of  industry.     In  one 
business  the  surplus  will  be  enormous,  in  another 
there  will  be  none  at  all,  in  a  third  there  will  be  a 


THE   DISTRIBUTION   OF  WEALTH     113 

positive  loss.  This  we  can  see  is  a  very  un- 
economical arrangement,  enriching  some  people 
beyond  what  is  needful  for  the  highest  happiness, 
and  ruining  others,  to  their  own  misery  and  the  de- 
rangement of  trade.  A  small  difference  of  ability, 
an  unforeseen  turn  of  events,  and  one  man  makes 
his  fortune  while  another  is  ruined.  The  result 
is  that  neither  is  happy.  Neither  beggary  nor 
princely  wealth  conduces  best  to  a  happy  and  well- 
ordered  life.  For  the  wealth  made  there  is  no 
tangible  increase  of  happiness  or  development  to 
show.  Meanwhile  the  lure  of  profit-making  cor- 
rupts all  industry  and  changes  honest  work  into 
a  constant  struggle  to  get  more  and  more,  and  an 
unceasing  effort  to  overreach  others.  Nor  does 
the  evil  cease  with  the  producer.  When  money 
becomes  the  test  of  success,  and  I  am  held  to 
have  proved  myself  a  better  man  than  you  if  I 
have  earned  more,  then  the  signs  of  wealth  are 
held  the  proofs  of  merit  and  ability,  and  display 
becomes  the  first  object  for  men  of  means.  The 
vanity  of  wealth  which  corrupts  the  life,  vulgarises 
the  social  intercourse,  destroys  the  simplicity  of 
men  and  women  from  the  cottage  to  the  castle, 
and  fills  the  world  with  ugliness  and  discomfort, 
is  doubtless  referable  in  part  to  permanent  human 
weaknesses,  but  it  owes  its  abnormal  development 
to  the  spirit  of  competition  and  pecuniary  profit. 

We  have  to  quarrel,  then,  both  with  the  dis- 
tribution of  the  producer's  surplus  as  effected  by 
competition,  and  with  the  results  to  character 
which  such  a  mode  of   distribution   brings   about. 

Now,  what  are  the  compensatory  benefits  of  the 
system  of  private  profit?  Regarding  profit  as  the 
wages  of  the  employer — the  wages  allowed  him 
by  society  under  the  economic  system  which  it  sup- 
ports— we  have  to  ask,  Is  it  the  most  economical 

8 


114  THE  LABOUR  MOVEMENT 

method  of  payment?  So  far  as  the  employer's 
profit  depends  on  luck — i.e.,  on  causes  beyond  his 
control — there  is  clearly  no  economic  advantage 
to  society  whatsoever  in  awarding  it  to  him  ;  so 
far  as  the  prospect  of  additional  gain  stimulates 
him  to  socially  useful  exertion  society  does  obtain 
a  certain  quid  pro  quo.  But,  in  the  first  place, 
the  individual  employer,  aiming  at  his  own  profit, 
does  not  necessarily  use  means  thereto  which  con- 
tribute to  the  general  welfare.  If,  for  example, 
he  is  able  by  skilful  advertisement  to  j)alm  off 
inferior  goods  on  the  public,  his  profit  is  due  to 
his  sagacity  or  cunning,  but  not  to  any  real  social 
service.  To  lie  well  requires  consummate  art  to 
which,  in  some  departments  of  modern  industry, 
a  lifetime  may  be  profita^bly  devoted,  but  it  does 
not  conduce  to  the  general  comfort.  Thus,  if 
honest  employers  make  an  honourable  profit  by 
useful  work  directed  with  great  ability,  and  are 
paid  less  than  the  value  of  tlieir  services,  we  must 
set  agamst  them  the  dishonest  traders  who  profit 
at  the  expense  of  their  own  uprightness  and  the 
general  wellbeing,  and  who  are  encouraged  thereto 
by  many  of  the  circumstances  of  modern  commerce. 
But  further,  it  may  be  doubted  if  the  individu- 
alist system  either  checks  the  bad  or  encourages 
the  good  in  the  best  way.  The  stakes  are  too 
high.  Men  stand  to  win  or  lose  their  all.  They 
oscillate  between  riches  and  beggary.  As  a  class 
our  modern  captains  of  industry  are  not  to  be 
envied.  They  bear  the  first  brunt  of  commercial 
storms.  They  are  subject  to  repeated  periods  of 
strain  and  over-pressure.  The  ups  and  downs 
of  fortune  tell  on  their  mental  and  physical  health. 
It  has  even  been  doubted  whether  the  individualist 
system  of  industry  does  not  most  afilict  those  who 
are  generally   supposed  to  gain   by   it   most. 


THE   DISTRIBUTION   OF  WEALTH     115 

We  see,  then,  that  the  system  which  leaves  the 
producers'  surplus  as  a  prize  to  be  fought  for 
may  stimulate  good  work,  but  it  also  cherishes 
sinister  arts.  It  distributes  its  rewards  in  a  way 
that  causes  over-strain  and  worry,  even  to  the 
favoured  ones.  It  produces  a  competitive  spirit 
concentrated  on  personal  gain  instead  of  public 
good.  And  in  the  train  of  all  this  come  the  evils 
we  discussed  before,  the  repeated  disorganisation 
of  industry,  and  the  consequent  loss  of  capital  and 
deterioration  of  labour. 

Now,  when  an  industry  is  organised  by  con- 
sumers for  their  collective  benefit,  profit  on  ex- 
change, as  we  have  seen,  disappears.  Either  goods 
are  reduced  to  cost  price  or  the  balance  falls 
to  the  comxmunity  which  has  organised  production — 
is  communised.  This  is  commonly  held  to  be 
dangerous  to  the  efficiency  of  industry,  and  to 
put  a  bar  to  the  wide  extension  of  consumers' 
co-operation,  whether  voluntary  or  municipal  or 
national.  Our  analysis  tends,  on  the  contrary,  to 
reveal  in  the  change  the  possibility  of  great  gain — 
financial  gain  to  the  common  purse,  gain  in  real 
happiness  to  the  producer,  economic  and  social 
gain  in  the  direction  of  industry  to  common  needs 
in  place  of  objects  from  the  supply  of  which  enter- 
prising producers  may  derive  personal  advantage. 
These  gains  are,  it  must  be  granted,  governed 
by  the  condition  that  through  such  an  organisation 
we  can  secure  work  ably  and  efficiently  directed — 
that  is  to  say,  that  a  community  can  command  the 
services  of  men  of  business  capacity  and  organising 
power  by  payment  of  adequate  salaries,  by  the 
selection  of  the  best  men  for  promotion,  and  by 
rewarding  the  heads  of  the  service  by  conferring 
on  them  trust,  responsibility,  and  honour.  That 
these   conditions   are    realisable    is    questioned    by 


116  THE   LABOUR  MOVEMENT 

laissez-faire  economists,  but  would  not  be  regarded 
as  beyond  hope  either  by  those  who  take  a  more 
concrete  view  of  human  nature  or  by  those  who 
study  the  actual  working  of  some  of  our  best 
institutions  to-day.  If  Mill  could  hold  that  men 
would  some  day  learn  to  dig  and  weave  for  their 
country  as  well  as  to  fight  for  it,  we  may  with 
still  more  confidence  hope  that  men  may  learn 
to  follow  earnestly  and  strenuously  the  higher  call- 
ing of  directing  those  who  dig  or  weave  for  the 
same  end. 

This  is  not  a  dream,  nor  even  a  supposition. 
It  is  matter  of  fact  realised  in  many  departments 
of  industry  to-day.  In  medicine,  in  the  Churches, 
in  education,  in  the  Civil  Service,  wherever  men 
feel  an  interest  in  the  work  as  well  as  in  its  wage, 
work  is  given  gladly  and  willingly  to  the  utmost 
of  a  man's  power  for  a  fixed  reward.  And  the 
same  holds  in  industry  pure  and  simple.  Take 
the  co-operative  world,  where,  as  Mrs.  Webb  has 
well  pointed  out,  we  have  men  dealing  with  millions 
of  money,  carrying  on  complicated  operations  on 
a  vast  scale  for  the  salary  of  a  clerk.  There  are 
in  truth  other  motives  to  action  than  those  of  direct 
and  proportionate  pecuniary  reward.  There  is 
the  hope  of  advancement,  of  social  esteem,  there 
is  the  pure  love  of  work,  and  the  desire  to  serve 
society.  There  are  motives  mercenary  and 
motives  of  devotion.  These  last  are  indeed 
diminished  by  a  social  system  which  makes 
material  success  the  main  object  of  respect,  and 
tends  to  regard  devotion  to  the  public  service  as 
either  humbug  or  simplicity.  But  they  can  never 
be  extinct,  and  we  have  but  to  curtail  the  field 
of  the  other  impulses  which  compete  with  them 
in  human  nature,  and  they  will  of  themselves 
expand  to  all  their  original  vigour. 


THE   DISTRIBUTION   OF  WEALTH     117 

At  the  same  time,  we  have  already  admitted  that 
the  advance  of  Co-operative  industry  must  be 
gradual  and  even  experimental.  It  must  be  justified 
point  by  point  by  showing  equal  efficiency  of  per- 
formance, and  to  obtain  this  efficiency  it  must  build 
up  an  honest  and  competent  administrative  service. 
The  actual  evolution  of  such  a  service  in  England 
during  the  last  two  generations  in  national  affairs, 
and  its  more  recent  growth  in  municipal  affairs 
is,  in  fact,  the  working  basis  of  our  practical 
Socialism  so  far  as  it  has  as  yet  advanced.  Every 
further  advance  must  depend  on  a  parallel  develop- 
ment of  the  governing  machinery.  Whether  it  is 
at  all  probable  or  even  desirable  that  this  method 
of  organisation  should  be  extended  to  the  whole 
of  industry,  or  whether  there  may  not  remain  a 
permanent  sphere,  not  only  for  voluntary  Co-opera- 
tion but  even  for  the  independent  producer,  are 
further  questions  on  which  we  have  touched 
above,  and  to  which  we  shall  return  in  the  next 
chapter.  For  the  present  we  maintain  that  the 
effect  of  the  collective  organisation  of  industry  in 
communising  profit  and  substituting  the  spirit  of 
social  service  for  the  motives  of  private  gain  are 
to  be  reckoned  as  large  items  on  the  credit  side  of 
this  system,  and  a  sound  motive  for  its  extension 
so  far  as  that  is  practicable. 

But  besides  "  Profit  "  in  the  narrower  sense, 
there  is  a  second  element  in  the  surplus  product 
not  yet  considered.  While  profits  are  fickle  and 
variable  a  great  portion  of  the  excess  of  value 
produced  over  the  cost  of  producing  it  goes  to 
private  pockets  in  fixed  charges.  And  it  will  con- 
tinue to  do  so  however  much  you  communise  profit. 
A  Co-operative  Society  must  pay  interest  on  its 
capital  and  rent  on  its  premises.  A  municipality 
must  purchase  or  rent  land  for  its  public  works. 


118  THE  LABOUR  MOVEMENT 

Now,  Rent  is  the  price  paid  for  differential  ad- 
vantages in  production  to  those  who  own  such 
advantages.  And  "economic  Rent"  there  always 
is  and  always  must  be.  For,  as  we  have  shown, 
some  goods  are  bound  to  be  produced  under  more 
favourable  circumstances  than  others  which  are 
brought  to  the  same  market.  This  advantage  may 
be  due  to  various  things,  such  as  fertility  or  situa- 
tion, and  the  owners  of  such  advantages  can  exact 
a  price  for  the  use  of  them.  No  legislation  can 
abolish  economic  rent.  But  the  law  can  and  does 
determine  who  shall  receive  it.  And  the  question 
is,  Does  the  law  do  wisely  in  allowing  private 
individuals  to  absorb  this  enormous  portion  of  the 
national  produce?  To  ask  this  question  is  to  make 
no  attack  on  the  owners  of  Rents,  who  may  be 
most  estimable  men,  and  in  many  cases  may,  of 
their  free  choice,  be  doing  good  service  to  the 
State.  It  is  merely  to  direct  attention  to  the 
existence  of  a  permanent  charge  upon  the 
"  National  Dividend,"  for  which  no  adequate  return 
is  made  and  for  which  no  return  need  be  made 
at  all. 

In  many  cases  the  value  for  which  rent  is  paid 
is  due  to  natural  causes  and  not  to  human  effort. 
Of  this  mining  royalties  are  a  conspicuous 
example.  In  other  cases  it  is  due  to  the  growth 
of  society,  as  instanced  by  the  price  of  land  in  the 
City  of  London.  In  yet  other  cases  it  is  due 
to  a  monopoly  created  by  the  State,  as  instanced 
by  the  value  of  licensed  premises.  Whenever  we 
pay  for  value  so  created  we  get  no  compensatory 
service  rendered,  and  we  thus  violate  the  first 
principle  of  a  sound  economic  system. 

It  would  undoubtedly  be  the  object  of  a 
democratic  control  of  the  industrial  system  to 
divert  every  form  of  economic  rent  from  private 


THE   DISTRIBUTION  OF  WEALTH     119 

to  public  coffers.  The  principle  has,  in  fact,  been 
accepted  by  the  nation  in  the  Budget  of  1909. 
From  this  time  forward,  in  the  case  of  land,  that 
increment  of  value  which  does  not  depend  on  im- 
provements made  by  the  landowner  is  subject  to 
a  special  tax.  Whether,  indeed,  with  all  the 
limitations  with  which  it  is  hedged  in,  this  source 
of  revenue  will  be  found  very  productive  the  future 
will  decide.  But  the  principle  is  there,  and  it  will 
be  extended. 

But  the  increment  tax  looks  only  to  the  future. 
What  of  the  existing  values  locked  up  in  urban 
sites,  enabling  owners  to  draw  so  heavy  a  toll  on 
urban  and  suburban  occupiers?  The  taxation  of  the 
unearned  increment  has  begun  too  late.  It  has 
allowed  a  vast  accumulation  of  value  due  to  the 
growth  of  the  community  to  pass  into  private 
hands.  Is  the  community  to  suffer  this  in  per- 
manence? If  yes,  it  must  pay  a  large  toll  without 
receiving  any  return  of  personal  service.  If  no, 
it  must  go  back  on  its  past  and  impose  a  burden 
which  will  not  easily  be  adjusted  to  the  right 
shoulders  ;  for  it  has  always  allowed  land  to  pass 
freely  in  the  market.  The  valuable  soil,  or  rather 
space,  of  the  City  of  London  has  doubtless  changed 
hands  many  a  time  and  oft  since  London  took  its 
high  place  among  the  cities  of  the  world.  Those 
iwho  have  received  the  increment  have  sold  it, 
and  existing  owners  have  already  paid  a  high  and 
possibly  full  value  for  it.  Are  they  to  be  taxed 
on  that  for  which  they  have  already  paid?  Let 
us  put  it  into  figures.  Here  is  a  plot  of  land 
worth  thirty  years  ago,  say,  £100  an  acre,  and 
now  worth  £400,  The  increment  is  £300,  and  we 
agree  that  this  ought  to  have  fallen  to  the  com- 
munity. But,  as  likely  as  not,  the  land  has  been 
recently  sold,  and  that  perhaps  at  its  full  value. 


120  THE  LABOUR  MOVEMENT 

If  we  now  tax  the  land  we  are  not  getting  the 
value  back  from  the  man  who  has  received  it, 
but  are  exacting  it  a  second  time  from  the  man 
who  has  already  paid  for  it.  Questions  such  as 
these— and  this  is  one  of  the  most  elementary- 
show  the  enormous  difficulty  in  the  application  of 
a  principle,  equitable  in  itself,  to  the  facts  of  an 
economic  structure  which  has  grown  up  on  different 
principles.  More  specifically,  it  suggests  that  in 
this  case  if  any  one  ought  to  be  taxed  it  is  not 
the  actual  owner  of  the  site  '  but  the  man  who 
has  capitalised  the  value  and  sold  it— that  is  to 
say,  it  introduces  us  to  the  question  of  the  taxation 
of  capital  and  interest.  Now,  according  to  our 
treatment  and  that  of  the  economists,  interest  is 
not  a  part  of  surplus,  but  a  part  of  cost— that  is 
to  say,  the  interest  on  the  capital  employed  in 
production  must  be  reckoned  as  a  part  of  the 
normal  cost  of  the  article,  and  therefore  as  fixing 
its  price.  Ought  we  not,  therefore,  to  treat  it 
quite  differently  from  rent  and  profits  and  to 
regard  it  as  legitimately  accruing  to  private  owners 

'  There  remain,  however,  sufficient  reasons  for  such  a  change 
of  municipal  taxation  as  will  transfer  the  burden  of  rates  from 
buildings  to  sites.  The  rating  of  buildings  and  improvements 
generally  is  a  direct  tax  on  industry.  All  such  taxes  it  is 
desirable  to  abolish  and  transfer  them  to  the  surplus  of  industry 
in  one  form  or  another.  Site  value  is  a  form  of  that  surplus, 
and  should  ultimately  bear  the  entire  burden  of  municipal 
expenditure  by  which,  at  bottom,  it  is  created.  The  fact 
that  land  has  always  changed  hands  freely  will  cause  any  such 
change  to  fall  hardly  on  recent  purchasers.  This  is  a  reason 
for  making  the  change  gradually,  and,  as  shown  in  the  text,  for 
distributing  the  burden  over '  capital  generally.  This  gives 
the  purchaser  time  to  recoup  himself  against  any  serious  loss. 
It  must  be  remembered  that  all  kinds  of  business  transactions 
go  forward  subject  to  the  possibility  of  unforeseen  loss  or  gain 
through  changes  in  the  methods  of  collecting  revenue.  The 
duty  of  considerate  statesmanship  is  to  make  such  changes  so 
gradual  as  to  minimise  the  hardship  to  individuals  which  is  too 
often  incidental  to  general  improvement. 


THE  DISTRIBUTION  OF  WEALTH     121 

of  capital  as  the  appropriate  return  to  them  for 
their    share    of    production? 

To  determine  this  question  we  must  put  to- 
gether the  principles  of  distribution  on  which  we 
have  been  working.  We  laid  down  at  the  outset 
that  the  fair  wage  is  that  which  serves  per- 
manently to  stimulate  and  maintain  a  social 
service.  If  that  is  so,  that  principle  measures 
the  income  which  (charity  apart)  will  fall  to  each 
individual  for  his  private  use  in  a  well-organised 
industrial  system.  Whatever  he  acquires  over  and 
above  that  is  "  surplus."  The  line  between  cost 
and  surplus  would  then  be  drawn  on  different 
principles  and  at  a  different  point  by  a  collectively 
controlled  system  as  compared  with  a  competitive 
system.  That  is  to  say,  a  system  founded  on 
principles  of  equity  as  the  basis  of  a  co-operative 
organisation  of  industry  would  divide  the  total  pro- 
duct of  national  industry  into  two  portions.  The 
one  representing  the  sum  of  the  fair  wage  of  all 
producers  would  go  to  the  producers  as  their 
private  income.  The  other,  being  the  surplus  left 
over,  would  have  no  individual  with  a  just  claim 
upon  it,  and  would  therefore  fall  to  the  community 
for  the  enrichment  of  the  common  life.  Such  a 
division  is,  of  course,  an  ideal  which  could  only  be 
attained  with  mathematical  exactitude  by  means 
of  a  degree  of  centralisation  which  we  do  not 
contemplate  as  practicable,  and  then  only  with  the 
aid  of  knowledge  which  is  not  perhaps  fully  attain- 
able. But  it  serves  to  express  the  principle  upon 
which  a  just  economic  organisation  would  rest, 
and  by  reference  to  which  the  organisation  of  the 
industrial  and  fiscal  system  should  be  guided. 

How,  then,  would  interest  on  capital  fare  in  this 
distribution?  Is  it  payment  for  a  service  or  not? 
Directly,   it   is   payment   for   the   use   of   capital  ; 


122  THE   LABOUR  MOVEMENT 

but  from  the  present  point  of  view  a  distinction 
must  be  drawn  between  inherited  and  acquired 
capital.  The  interest  that  a  man  obtains  on  his 
own  savings  is  earne"d  by  his  own  past  industry. 
Indirectly,  he  may  be  said  to  have  paid  for  it 
by  his  own  work.  That  which  he  obtains  from  the 
use  by  some  one  else  of  his  patrimony  he  has 
clearly  not  earned.  He  neither  pays  for  it  nor 
has  paid  for  it  by  work  of  his  own.  It  would 
seem,  then,  that  the  distinction  between  earned 
and  unearned  income  at  present  recognised  in  our 
finance  is  only  a  rough  approximation  to  the  true 
principle  ;  for  in  our  income-tax  arrangements  all 
rent  and  all  interest  on  capital  figure  as  unearned 
income,  without  reference  to  the  question  whether 
the  land  was  bought  or  the  capital  acquired  by 
personal  saving  or  by  inheritance.  It  is  right, 
however,  to  remark  that  the  balance  is,  in  a 
measure,  redressed  by  the  legacy  and  succession 
duties  ;  and  it  may  be  added  that  the  general 
tendency  of  financial  legislation  to  transfer  taxa- 
tion from  productive  industry  to  the  surplus  and 
the  accumulations  of  the  past  accords  with  the 
principles  of  sound  collective  organisation. 

But  to  return  from  taxation,  as  we  know  it,  to 
the  question  of  principle,  it  is  clear  that  industry, 
whether  collectively  organised  or  not,  requires 
capital,  and  that  in  one  form  or  other  capital  has 
to  be  paid  for.  A  community  might  by  degrees 
accumulate  its  own  capital,  but  it  would  be  at 
the  cost  of  saving  on  its  annual  expenditure.  At 
present  its  method  is  that  of  borrowing  from  its 
own  members  ;  the  payment  is  interest,  and  the 
rate  of  interest  fixes  itself  in  accordance  with  the 
general  demand  for  capital  for  investment  and 
the  amount  available  for  the  purpose.  Society 
cannot  lower  this  rate  by  arbitrary  decree.     What 


THE   DISTRIBUTION   OF  WEALTH     123 

it  can  do  is,  'by  the  taxation  of  inherited  wealth, 
to  make  itself  part  heir  of  past  accumulations  ; 
and  it  is  desirable  that  it  should  do  so,  since 
interest  on  inherited  wealth  is  not  payment  for 
service  rendered  to  those  by  whom  it  is  rendered, 
but  is  a  tribute  to  the  dead  hand.  To  this  argu- 
ment it  is  replied  that  a  man's  motive  in  saving 
and  building  up  a  fortune  is  to  provide  for  his 
children  and  perhaps  found  a  family.  If  inherit- 
ance is  taxed  so  heavily  that  in  effect  the  State 
becomes  the  heir,  this  motive,  it  is  urged,  would 
cease  to  operate,  saving  would  diminish,  and  we 
should  have  insufficient  capital.  At  any  rate,  if 
any  one  country  were  to  go  too  far  beyond  its 
neighbours  in  such  taxation,  there  would  be  a 
transference  of  capital  to  other  lands.  This  possi- 
bility cannot  be  altogether  ruled  out.  The  taxation 
of  inheritance  must  be  governed  by  the  actual 
need  of  industry  for  accumulation,  and  though 
it  could  probably  be  carried  a  good  deal  farther 
than  has  yet  been  done  without  risk,  any  more 
thoroughgoing  policy  must  rest  on  the  repayment 
of  public  debt  and  the  acquisition  by  the  State 
and  the  Municipality  of  capital  of  their  own.  It 
is  clearly  the  object  of  a  collectively  organised 
industry  to  emancipate  itself  from  the  tribute  to 
past  generations,  and  this  implies  that  the  com- 
munity would  become,  not  only  the  supreme  land- 
owner, but  also  the  chief  capitalist.'     But  it  will 

^  It  may  be  asked  whether  the  super-tax,  which  has  become 
a  weapon  of  "  democratic  finance,"  is  justified  by  any  of  the 
above  considerations,  since  it  falls  on  large  incomes  whether 
earned  or  unearned.  And  the  same  doubt  may  attach  to  the 
graduation  of  death  duties,  since  all  inherited  property,  it  may 
be  said,  falls  under  the  ban  if  there  is  a  ban  at  all.  The  reply 
is  (i)  that  it  may  safely  be  assumed  that  incomes  above  the  limit 
at  present  taken  of  ;^5,ooo  per  annum  contain  large  elements  of 
"  surplus,"  which  in  the  last  resort  means  that  the  income  which 
remains  when  the  tax  is  deducted  is  amply  sufficient  to  maintain 


124  THE  LABOUR  MOVEMENT 

achieve  this  end,  not  by  the  confiscation  or  con- 
fiscatory taxation  of  any  single  form  of  property, 
but  by  taxation  equably  distributed  over  all  forms 
of  "  surplus,"  and  steadily  diverting  the  flow  of 
surplus  from  the  coffers  of  the  individual  to  those 
of   the   community. 

It  is,  of  course,  possible  to  maintain  that  a 
much  more  revolutionary  break  with  the  past  is 
required,  and  that  measures  that  would  press  very 
hardly  on  existing  owners  are  justified  by  the  needs 
of  poverty.  But  the  history  of  revolutions  is  not 
so  encouraging  that  we  should  want  to  launch  upon 
them  spontaneously,  A  country  which  flings  away 
national  credit  for  the  due  fulfilment  of  all  its 
obligations  parts  with  one  of  the  greatest  of  its 
permanent  assets.  Nor  would  it  be  in  accordance 
with  the  general  feeling  in  the  Labour  world  itself 
to  attack  wealth  as  wealth.  Considering  the  tre- 
mendous contrasts  of  fortune  which  every  London 
street  presents,  there  is  remarkable  absence  of  any 
spiteful  feeling  against  the  more  fortunate  classes. 
Most  people,  indeed,  would  agree  that  it  matters 
little  how  wealthy  the  few  may  be  provided  that 
the  many  are  not  poor,  and  provided  that  adequate 
provision  is  made  for  all  socially  desirable  objects. 
Creditable  as  this  view  is,  there  is  something  to 
be  said  on  the  other  side.  The  doctrine  of  the 
needle's  eye  is  sadly  out  of  fashion  in  these  com- 
mercial days,  and  we  may  perhaps  leave  the  ques- 
tion of  the  effect  of  great  riches  on  the  happiness 
of  their  possessors  to  those  possessors.  But  from 
the  social  point  of  view  luxury,  display,  patronage, 

any  form  of  social  service,  whatever  degree  of  ability  it  may 
involve  ;  (2)  as  to  capital,  as  long  as  society  only  provides  the 
bare  minimum  of  maintenance  and  education  for  children 
inherited  private  property  on  a  modest  scale  is  performing  a 
useful  function.  Inheritance  on  a  larger  scale  does  not  perform 
any  further  function  of  value. 


THE   DISTRIBUTION   OF  WEALTH     125 

and  the  power  of  the  purse  have  evil  effects  not 
merely  as  the  correlatives  of  poverty,  but  in  their 
direct  and  indirect  influence  on  the  standard  of 
living.  Merely  as  a  political  force,  the  influence 
of  wealth  does  not  diminish.  The  means  of 
influencing,  and  even  of  informing  or  refusing  to 
inform,  opinion  are  in  the  hands  of  those  who  hold 
the  purse-strings.  Political  organisation  as  it 
becomes  more  efficient  costs  more  money,  and  it 
is  only  by  the  payment  of  Members  of  Parliament, 
the  provision  of  election  expenses  out  of  public 
funds,  and  the  rigorous  limitation  of  private  ex- 
penditure that  democracy  can  hope  to  maintain 
itself.  Socially,  the  employment  of  great  wealth, 
even  if  well-intentioned,  is  apt  to  be  ill-directed. 
The  man  who  is  surrounded  by  riches  sees  the 
world  as  through  a  glass  darkly.  He  hears  its 
cries  as  through  a  blanket  ;  he  gets  out  of  relation 
to  his  kind.  But  the  glitter  of  his  life  sets  a 
standard,  dazzling  but  unreal,  for  the  ambitions 
of  the  less  fortunate.  It  gives  effort  the  wrong 
orientation,  directing  it  towards  material  accumula- 
tion in  place  of  the  conditions  which  affect  the 
substance   of   human   happiness. 

With  all  this,  it  may  be  agreed  that  it  would 
be  disastrous  for  democracy  to  attack  wealth  as 
wealth.  The  problem  of  industrial  democracy  is 
to  secure  the  material  conditions  of  a  healthy  life 
for  the  community  as  a  whole,  to  cure  the  disease 
of  poverty,  and  to  provide  for  the  community  the 
resources  for  all  objects  of  common  utility.  In 
financing  these  objects,  it  defeats  its  own  ends  if  it 
adds  to  the  burdens  on  production.  It  must  draw 
on  the  surplus,  and,  so  far  as  it  can  accurately 
mark  off  that  which  is  surplus  from  that  which 
is  necessary  to  production,  it  can  increase  its  drafts 
without  fear  of  impeding  industry.     But  the  legiti- 


126  THE   LABOUR  MOVEMENT 

mate  object  is  not  to  diminish  the  surplus  for  tlie 
sake  of  diminishing  it,  but  to  provide  for  some 
niatter  of  public  utility.  The  simple  principle  of 
democratic  finance,  in  short,  is  the  application  of 
the  surplus  that  remains  over  and  above  the  fair 
wage  of  the  producer  to  common  needs. 

We  are,  then,  able  to  state  in  outline  the  distri- 
bution of  wealth  at  which  an  industrial  democracy- 
would  aim.  To  all  engaged  in  production,  whether 
by  output  of  brain  power  or  muscle  power,  it 
would  seek  to  assure  a  fair  wage,  and  that  is,  such 
a  wage  as  serves  to  stimulate  and  maintain  in  per- 
manence the  function  which  they  perform.  The 
surplus,  whether  in  the  form  of  interest,  rent,  or 
profit,  it  would  bring  into  the  common  chest  for 
public  purposes.  But  a  modern  nation  is  too  large 
and  its  administration  too  cumbrous  and  mechanical 
to  carry  out  this  ideal  through  the  agency  of  the 
central  government  alone.  Local  governments  and 
voluntary  associations  have  their  part  to  play.  The 
Trade  Union  has  probably  a  permanent  function 
in  watching  over  the  interests  of  each  group  of 
producers.  The  Co-operative  Society  will  con- 
tinue to  organise  forms  of  production  and  ex- 
change which  are  not  suited  to  the  mechanical 
methods  of  the  State.  Even  the  individual  pro- 
ducer will  have  his  place  wherever  initiative, 
originality,  and  personal  taste  are  the  essential 
factors  in  value.  The  supreme  function  of  the 
State  is  to  exercise  such  a  measure  of  control  as 
will  secure  the  general  direction  of  industry  to 
ends  of  social  value,  fair  conditions  for  the  worker, 
and  equitable  distribution  of  the  product. 


CHAPTER    V 

THE    CONTROL    OF    INDUSTRY    AND    THE    LIBERTY 
OF    THE    INDIVIDUAL 

Let  us  now  review  our  position.  Let  us  suppose 
the  principles  we  have  advocated  to  be  recognised 
and  carried  out  to  their  logical  conclusion,  an'd  let 
us  try  to  picture  the  resulting  state  of  industry. 
The  work  of  the  nation  would  then  be  carried  on 
in  large  measure  under  the  direction  of  communi- 
ties of  consumers.  There  would  be  great  national 
[works  giving  the  nation  control  over  the  vital 
industries  ;  there  would  be  probably  a  still  greater 
development  of  municipal  works  ;  and  there  would 
be,  supplementing  these,  voluntarily  formed  Co- 
operative Associations  on  the  existing  model,  united 
by  the  Federal  principle,  and,  ultimately,  co-exten^ 
sive  with  the  community.  There  would  also  be 
private  enterprise  in  the  arts,  the  artistic  handi- 
crafts, and  the  profess'ions  ;  and  it  is  probable 
that  many  branches  of  industry  would,  as  to  their 
immediate  direction,  remain  in  private  hands.  But 
over  all  the  State  would  exercise  a  supreme  con- 
trol, regulating  and  correlating  economic  forces 
which  are  now  left  to  adjust  themselves  as  they 
may.  Throughout  the  industrial  system  suitable 
remuneration  and  healthy  conditions  of  work  would 
be  ensured  for  all  classes  of  producers  by  good 
legislation,  backed  up  and  supplemented  by  strong 

137 


128  THE   LABOUR  MOVEMENT 

Trade  Union  action.  The  surplus  product,  when 
this  charge  is  met,  would  be  in  the  hands  of 
the  community  for  common  purposes,  that  there 
might  be  the  means  of  life  for  the  infirm,  and  of 
culture  and  enjoyment  for  all  ;  and  the  ceaseless, 
wearying  roar  of  the  great  engine  of  competition 
would  be  still. 

Will  such  an  ideal  ever  become  actual?  As  to 
its  complete  realisation  I  answer,  "  No  one  can 
tell,  and  it  is  not  our  business  to  find  out."  What 
concerns  us  to-day  is  not  the  possibility  of  a 
complete  ideal,  but  the  practical  value  and  imme- 
diate promise  of  certain  existing  tendencies.  Here 
are  certain  great  economic  evils  which  all  deplore, 
and  here  are  certain  movements  aiming  at  reform. 
Are  these  movements  actually  doing  good?  Do 
they  promise,  if  developed  along  the  same  lines, 
to  go  to  the  root  of  the  matter?  These  are  the 
questions  which  we  have  tried  to  answer,  and  which 
we  have  seen  reason  to  answer  in  the  affirmative. 
If  this  answer  be  justified,  then,  whatever  changes 
the  future  may  necessitate,  these  movements  form 
for   the   present    the   means   of   progress. 

Thus  we  may  readily  admit  difficulties  in  apply- 
ing the  co-operative  form  of  industry  to  every 
department  of  production.  In  the  case  of  foreign 
trade,  for  example,  co-operation  of  consumers  to 
arrange  for  production  '  would  seem  almost  out 
of  the  question,  unless  in  some  far-off  Federation 
of  the  world  which  is  yet  but  a  dream.  Again, 
in  the  case  of  some  forms  of  production,  the 
principle  seems  somewhat  out  of  place,  and 
is  not  likely  to  be  realised  unless  in  some 
modified  form.  In  short,  wherever  the  industrial 
revolution  has  not  set  its  mark,  and  where  industry 

'  Transport,  however,  is  already  undertaken  by  the  Wholesale 
Societies  in  ships  of  their  own. 


THE   CONTROL   OF   INDUSTRY        129 

passes  beyond  the  limits  of  the  nation,  collective 
control  by  consumers  becomes  a  difficult  matter. 
The  case  of  Agriculture  is  one  of  special  interest 
in  this  relation,  and  it  is  worth  while  to  discuss  a 
little  more  fully  the  way  in  which  our  principles 
seem  capable  of  application  in  its  case. 

Here  there  is,  at  first  sight,  a  strong  drift  of 
things  in  the  other  direction.  We  seem  to  be 
slowly  sprinkling  England  with  individualist  pro- 
ducers of  a  pre-revolutionary  type.  Allotments 
and  small  holdings  seem  to  many  people  opposed, 
not  only  to  every  principle  of  "  Collectivism,"  but 
to  the  whole  tendency  of  the  Industrial  Revolution. 
But  this  is  not  altogether  the  case.  The  small 
occupier  himself  is  an  individualist  producer,  no 
doubt.  And  a  system  of  yeomanry  or  peasant 
proprietorship  would  doubtless  bring  back  many, 
of  the  evils,  ethical  and  economical,  of  primitive 
individualism.  But  with  communal  ownership  a 
very  different  system  is  introduced,  and  communal 
ownership  is  already  adopted  as  the  principle  of 
a  great  political  party— even  though  that  party 
has  not  yet  taken  the  final  step  of  repudiating 
every  opposing  principle.'  In  the  case  of  agricul- 
ture, rent  takes  the  greater  share  of  the  surplus 
product.  As  owners  and  rent-receivers,  then,  the 
community  will  exercise  some  of  the  most  im- 
portant rights  and  duties  of  collective  control. 
Of  course,  this  supposes  that  we  are  not  to  be 
satisfied  with  a  simple  quit  rent  to  be  fixed  once 
and  for  ever.  Such  a  plan  would  be  only  one 
degree  better  than  a  system  of  complete  purchase. 
Agricultural  values  are  constantly  shifting  in  rela- 
tion to  money,  and  if  we  fixed  rents  to-day,  thirty 
years  hence  our  tenants  might  be  in  possession  of 

'  98  per  cent,  of  the  Small  Holdings  acquired  under  the  Act  of 
1907  are  tenancies. 

0 


130  THE   LABOUR  MOVEMENT 

great  unearned  increments,  or— what  is  just  as 
likely — on  their  knees  to  us  to  relieve  them  of  an 
overgrown  burden.  The  small  holder  requires 
fixity  of  tenure,  but  subject  to  revision  of  rents 
at  stated  periods  of  considerable  length,  with 
allowance  for  all  improvements  made  by  the 
occupier.  In  this  way  the  community  absorbs  its 
due  share  of  the  produce — the  surplus  over  the 
remuneration    of    the    worker.' 

Furthermore,  voluntary  co-operation  has  an 
important  function  in  relation  to  agriculture  which 
is  of  comparatively  recent  development.  In  rela- 
tion to  farming  itself,  indeed,  it  has  not  made  much 
progress.  In  the  first  edition  of  this  work  I  noted 
that  38  Co-operative  Societies  farmed  3,315  acres 
in  Great  Britain.  Eighteen  years  later  (in  the 
figures  for  19 10)  I  find  that  89  Societies  farmed 
io,937|  acres,  with  an  aggregate  profit  of  £5,371, 
balanced  by  a  loss  of  £4,238.2  These  are  not 
figures  which  suggest  any  important  movement. 
It  is  in  the  matter  of  buying  and  selling  that 
Co-operation  is  beginning  to  play  a  large  part 
in  agriculture,  and  if  Small  Holdings  are  to  flourish 
there  will  be  a  field  for  Co-operative  Banking. 
The  Agricultural  Organisation  Society  is  now 
affiliated  to  the  Co-operative  Union,  and  from 
figures  given  in  the  Report  of  the  Union  for  19 10 
it  appears  that  there  are  altogether  411  Societies 
concerned  in  one  way  or  another  with  the  organisa- 
tion   of    agricultural    business    relations,    doing    in 

'  In  particular  in  view  of  the  possible  taxation  of  food,  rents 
should  be  adjustable,  by  an  automatic  scale  if  possible,  to  the 
ruling  price  of  the  crops  grown. 

*  43rd  Annual  Report  of  the  Co-operative  Union,  p.  46. 
These  farms  were  owned  or  rented  by  Wholesale  or  Distri- 
butive Societies.  In  addition  2  farming  societies  rented  808 
acres,  and  made  a  profit  of  £201  and  a  loss  of  ;£i2. 


THE    CONTROL   OF  INDUSTRY        131 

the  year  a  trade  of  £1,974900.1  The  small  holder 
will  have  even  greater  need  than  the  large  farmer 
for  co-operation  both  for  selling  and  for  buying  ; 
and  though  co-operation  of  producers  for  sale  is 
not  the  same  thing  as  co-operation  of  consumers, 
yet  they  admit  of  being  linked  together,  and  ex- 
periments in  that  direction  are  in  progress  .2  It 
would  not  seem  rash  to  lay  down  that  the  future 
development  of  Small  Holdings  in  this  country  is 
bound  up  with  the  possibility  of  devising  methods 
of  co-operation  which  will  enable  the  cultivator 
to  combine  the  advantages  of  the  large  dealer 
with  those  of  close  attention  to  his  own  plot. 

Outside  agriculture,  but  still  in  relation  to  the 
land,  the  Garden  City  movement  is  yet  another  form 
of  co-operation,  which  illustrates  how  much  may  be 
done  by  concerted  action,  not  necessarily  to  increase 
wealth  as  measured  in  money,  but  to  extend  that 
much  more  real  and  valuable  social  wealth  which 
consists  in  health,  space,  air,  order,  tranquillity, 
and  the  preservation  of  all  the  natural  beauties 
that  are  compatible  with  the  extension  of  bricks 
and  mortar.  Perhaps  the  function  of  the  Garden 
City  is  rather  to  be  a  precursor  of  the  Self -owned 
City,  which  the  Town-planning  movement  is  be- 
ginning to  promise  us,  than  to  create  a  new  and 
permanent  form  of  voluntary  co-operation.  In  any 
case,  we  are  in  presence  of  a  new  ideal  of  civic 
organisation,  which  yet  is  quite  a  natural  develop- 
ment of  the  revived  municipal  life  of  the  last 
three  generations.  The  first  function  of  the 
municipality  was  to  establish  a  competent  govern- 
ment, efficient  municipal  police,  cleanliness,  and 
sanitation.      Then    came    the    supply    of    public 

'  Ibid.,  p.  47. 

'  See  the  same  Report,  pp.  147-68,  for  an  account  of  con- 
ferences on  the  subject  among  some  of  the  organisations 
concerned. 


132  THE   LABOUR  MOVEMENT 

services— gas,  water,  electricity  ;  and,  again, 
education,  libraries,  and  art  galleries.  There 
follows  naturally  an  anti-smoke  crusade,  and  with 
it  will  come  the  possibility  of  considering  the 
appearance  of  the  city — a  hopeless  task  as  long  as 
art  was  represented  by  a  conventional  smoke- 
begrimed  statue,  and  the  lov^e  of  Nature  by  some 
straggling  sulphur-poisoned  bushes  lining  the  black 
grass  of  a  so-called  park.  But  as  the  city  gets 
back  its  own  in  the  value  of  its  land,  it  will  tend 
to  look  on  itself  with  clearer  social  consciousness 
as  a  common  home,  which  it  will  seek  to  make  as 
desirable,  as  full  of  comfort,  and  as  free  from  all 
that  offends  eye  or  ear,  and,  for  that  matter,  nose 
as  the  housewife  makes  her  private  home.  This, 
and  no  other,  is  the  way  of  return  to  "  Merrie 
England."  No  rise  of  wages  will  make  of  our 
Northern  or  Midland  coalfields  surroundings  in 
which  men  would  or  should  willingly  remain.  But 
each  local  community  owning  its  land,  and  there- 
fore able  to  get  back  its  expenditure,  might  make, 
even  under  the  most  untoward  circumstances,  a 
home  for  itself  which  would  be  a  home,  and  not 
a  collection  of  huts  dumped  down  anywhere  among 
cinder-heaps. 

It  would  be  easy  to  suggest  further  applications 
of  the  principle  of  social  control.  But  it  is  no  part 
of  my  purpose  to  prove  that  such  control  must 
necessarily  extend  over  the  entire  sphere  of  indus- 
trial life.  What  I  am  concerned  to  show  is  that 
the  principle  underlying  certain  existing  movements 
is  a  sound  one,  self -consistent  and  coherent,  and 
full  of  promise  for  the  better  life  of  society.  It 
is  a  principle  which  men  have  come  to  appreciate 
through  experience,  and  the  manner  of  applying 
it  and  the  limits  of  its  value  have  also  to  be 
learnt   through   experience.      It   is   an   interesting, 


THE   CONTROL  OF  INDUSTRY        133 

imaginative  exercise,  but  a  practically  futile  pro- 
ceeding to  work  out  in  our  heads  a  perfectly 
finished  political  order,  rounded  off  in  every  direc- 
tion. Of  such  Utopias  the  only  thing  that  can  be 
predicted  with  certainty  is  that  they  will  always 
be  Utopias.  We  should  bear  in  mind  that  the 
accomplishment  of  any  considerable  part  of  our 
hopes  will  open  wider  vistas  of  progress,  will  create 
new  problems  of  its  own,  and  demand  undreamed- 
of methods  of  solution.  No  human  system  ever 
yet  existed  in  completeness.  One  after  another 
has  grown  and  decayed,  and  none  has  stood  still 
in  self-satisfied  fullness  of  development.  Like  "  the 
waves  in  the  moonlit  solitudes  mild  of  the  mid- 
most ocean,"  they  swell  and  pass  before  we  have 
measured  the  height  of  their  crest.  Only  human 
society  under  wise  human  direction  does  not  rise 
to  fall  again  with  the  ceaseless  iteration  of  the 
ocean  waves.  The  tide  of  movement  sweeps  us 
higher  at  each  great  pulsation  ;  it  pauses,  but  it 
does  not  sink,  and  it  changes  its  course  only  to 
find  easier  inlets  to  t"he  shore. 

We  must,  then,  content  ourselves  with  a  limited 
view  of  the  future,  and  must  not  strain  our  eyes 
to  see  the  invisible.  It  is  enough  for  us  to  trace 
the  tendencies  of  our  principles  to  the  farthest 
point  discernible,  to  see  how  they  harmonise  and 
supplement  each  other,  and  how  the  application 
of  them  would  meet  the  economic  evils  of  the  day. 
When  these  evils  have  been  remedied  new  ques- 
tions will  arise,  and  it  may  be  that  new  principles 
will  be  required  for  their  solution. 

It  will  be  well,  however,  before  concluding,  to 
illustrate  our  principles  further  by  considering 
their  bearing  on  some  of  the  practical  problems 
of  the  day.  For  some  years  past  Parliament  has 
been   engaged   on   legislation   designed  to    lighten 


134  THE  LABOUR  MOVEMENT 

the  load  of  poverty.     At  one  point— in  the  estab- 
lishment of  Wages  Boards  in  a  few  badly  sweated 
industries— it  has  directly  attacked  the  problem  of 
insufficient  wages.     But  for  the  most  part  it  has 
tacitly  assumed  that  though  wages  may  suffice,  or 
may  come  to  suffice,  for  the  needs  of  the  average 
workman's  family  as   long  as   the  workman   is   in 
full  vigour  and  regular  employment,  they  do  not 
afford  a  margin,  and  cannot,  through  any  change 
which  is  within  the  bounds  of  probability,  be  ex- 
pected to  afford  a  margin,  for  the  mass  of  wage- 
earners  out  of  which  they  could  provide  unaided 
for  the  contingencies  of  life,  for  sickness,  old  age, 
unemployment,  and  the  education  of  children.     If 
that  is  the  case,  the  living  wag'e  is  calculated  on 
the  basis  of  the  maintenance  of  the  family  during 
the    full   vigour    and   regular   employment    of    the 
father,  and  provision  for  these  contingencies  should 
fall,     in     accordance     with     our     view,     on     the 
"  surplus."      In   two   leading   cases   the   State   has 
adopted    two    different    methods    of    making    the 
provision.      In   the   case  of   Old   Age    Pensions,   it 
provided  a  low  fixed  minimum  for  all  the  poor— 
with   minor    exceptions    which    need   not    here    be 
considered— leaving  it  to  individuals  to  add  to  the 
minimum    or    to    antedate    the    pension    through 
their   own   exertions.      Coupled  with  the   financial 
provisions    of    the    Budget    of    1909,    this    was    a 
clear     attempt     to     throw     this     charge     on     the 
"  surplus,"    and    is    fully    in    accordance    with    the 
principles  here  defended.     In  the  case  of  sickness 
and   unemployment   a    different   method   has    been 
followed.     The  bulk  of  the  expense  is  to  be  placed 
on  employers  and  employed,  the  State  contributing 
but    a    fraction    of    the    whole.      This    method    is 
more  questionable.     For  the  contributory  principle, 
as  applied  to  all  wages  above  the  minimum,  there 


THE   CONTROL  OF   INDUSTRY        135 

is  a  good  deal  to  be  said.     The  provision  against 
sickness  is  a  joint  responsibility  of  the  individual 
and  the  State.     The  State  has  a  duty  to  the  sick, 
and  each  man  has  a  duty  to  himself   and  to  his 
wife    and   children.      Moreover,    he    owes    a    duty 
to   the   State    in   the   matter,    because    in    practice 
the  State  cannot  leave  either  him  or  his  children 
to   die.      He   becomes   a  charge   on    the    common 
funds  if  he  has  not  made  provision  out  of  private 
funds.     The  State,  therefore,  'has  a  right  to  say  to 
him  :    "  Come,  let  us  club  together.     We  will  do 
half  and  you  shall  do  half."     But  this  is  to  assume 
that  the  man  has  already  a  margin  over  his  imme- 
diate needs.     The  demand  is  not  fairly  applicable 
to  those  who  have  no  such  margin,   and   it   is  to 
be  feared  that  the  tax  of  4d.,  weekly  will,  in  fact, 
press  heavily  on  those  whose   incomes   fall   below 
20S.  to  25s.  a  week.     The  difficulty  has  been  very 
partially  met  by  lowering  the  contribution  on  the 
very  lowest  grades  of  labour,  but  it  will  be  clearly 
necessary  to  press  for  further  exemptions.     There 
is,  however,  a  more  fundamental  criticism  on  the 
finance  of  the  Insurance  Law.     Raising  46..  from 
the    employed   workman    (I    need   not    here    com- 
plicate the  argument  by  bringing  in  the  case   of 
women)   and   3d.   from  the  employer,   it   imposes 
a  tax  of    76. .  per   week   on   employment   as   such. 
It  thus  places  the  whole  burden  of  the  cost  upon 
production,  and  economically  there  is  every  reason 
to  suppose  that  the  employer's  3d.  will  have  very 
much  the  same  effect  as  the  employee's  4d.     Now, 
there  is  not  the  smallest  reason,   other   than   that 
of   financial  convenience,   for   putting   this   tax   on 
employment.     A  man  needs  provision  against  sick- 
ness, not  because  he  is  employed,  but  because  he 
is  a  man.     The  State  owes  it  to  him,  not  because 
he  is  employed  by  somebody,  but  because  he  is  a 


136  THE   LABOUR  MOVEMENT 

citizen.  The  practical  difference  between  the  two 
principles  is  considerable.  It  is  the  tax  on  the 
employer  which  renders  it  impossible  to  insure 
poor  men  and  women  who  work  for  themselves 
on  even  terms,  which  necessitates  the  complicated 
provisions  for  married  women,  which  causes  the 
difficulty  as  to  casual  labour,  and  as  to  the 
responsibility  for  arrears  after  a  season  of  un- 
employment. Moreover,  the  Post  Office  scheme, 
the  blot  on  the  whole  law,  might  at  least 
have  been  left  voluntary  had  there  been  no 
employer's  contribution  to  consider.  But  beyond 
all  this  the  tax  on  employment,  it  may  be 
predicted,  will  act  like  a  tax  on  anything  else. 
It  will  tend  to  reduce  employment.'  In  the  trades 
which  are  compulsorily  insured  against  unemploy- 
ment as  well  as  sickness,  the  total  tax  on  a  week's 
employment  is  is. — that  is  to  say,  on  an  unskilled; 
labourer  at  20s.  a  week  it  is  a  tax  of  5  per  cent. 
Of  this  the  employer  directly  pays  5|d.,  and  this  is 
certainly  sufficient  to  influence  him  when  it  is  a 
question  of  taking  on  or  discharging  hands  in 
a  time  of  slack  trade.  It  is  also  a  very  serious 
burden  on  small  employers,  whose  average  weekly 
income  is  perhaps  not  much  greater,  and  is  pos- 
sibly more  precarious,  than  that  of  some  of  the 
men  whom  they  employ.  It  is  so  great  a  thing 
to  have  established  the  principle  of  National 
Insurance  that  it  may  be  argued  that  the  price 
was  worth  paying.  That  has  now  become  a  ques- 
tion of  academic  interest.  What  is  important  is 
to  press  the  necessity  that  the  State  should  assume 
a   larger   share   of   the   burden    with   a    view,    not 

'  In  other  words,  it  adds  to  cost  of  production.  In  the  view 
here  taken  all  such  taxes  are  bad  unless  the  aim  is  to  diminish 
production  as  in  the  case  of  taxes  on  liquor.  Otherwise  all 
taxation  should  fall  on  surplus.  This  is  the  simple  principle  of 
democratic  finance. 


THE  CONTROL  OF  INDUSTRY        137 

merely  to  the  relief  of  the  poorer  wage-earners, 
but  to  the  reduction,  and  ultimately  the  elimination, 
of  the  tax  on  employment.' 

An  employer  is  fairly  held  responsible,  not  for 
all  the  sickness  of  his  workpeople,  but  for  any 
sickness  that  arises  out  of  the  conditions  of  their 
employment  ;  and  that  clause  of  the  Act  is 
thoroughly  sound  which  places  on  employers  a 
special  liability  where  an  industry  yields  more  than 
an  average  share  of  sickness.  It  is  by  following 
the  same  clue  that  we  arrive  at  the  true  responsi- 
bility of  the  employer  in  the  matter  of  unem- 
ployment. We  have  seen  that  fluctuations  of 
employment  are  largely  attributable  to  the  uncon- 
trolled attempts  of  the  individual  employer  to 
expand  his  business  in  good  times .  There  is  no 
check  on  his  eagerness  at  such  times  to  bring 
workpeople  into  his  trade.  But  the  new  hands 
that  he  has  introduced  may  in  a  few  months  or 
years  be  out  of  work  ;  in  fact,  it  is  freely  main- 
tained that  many  industries  could  not  run  as  at 
present  constituted  without  reserves  of  labour, 
which  they  can  call  upon  in  good  times,  leaving 
them  to  rot  in  slack  seasons.  This  is  a  monstrous 
system,  and  the  only  real  check  on  it  is  to  make  the 
profits  of  the  industry  bear  the  full  burden  of  its 
labour  cost  in  slack  as  in  full  work.  The  Unem- 
ployment Insurance  scheme  seems  vaguely  to 
recognise  this  principle,  but  it  proceeds  so  inconse- 
quently  as  to  tax  the  employer  when  he  takes  a 
man  on,  remitting  the  tax  when  he  turns  him  off. 
This  is  not  precisely  the  way  to  stimulate  em- 
ployment   in   slack    periods.     "What    is    needed    is 

'  If  the  employer  had  to  pay  the  same  amount  in  income  tax 
it  might  seem  to  be  as  broad  as  it  is  long.  But  the  economic 
effect  would  be  quite  different.  Income  tax  falls  on  realised 
profit,  and  provides  no  motive  for  reducing  the  number  of  those 
employed. 


138  THE   LABOUR  MOVEMENT 

rather  to  cause  the  employer  to  contribute  to  an 
insurance  'fund  in  direct  proportion  to  the  fluctua- 
tions of  employment  in  his  industry.     Now,  there 
is  a  clause  in  the  Act   (clause   102)  which  provides 
for  a  periodical  revision  of  the  rates  of  contribution 
in    relation    to    the    actual   cost    of    unemployment 
insurance,  and  the  avowed  object  of  this  clause  is 
to  supply  a  motive  for  the  reduction  of  unemploy- 
ment.     But   as   they   stand,    these   provisions,   and 
others   intended  to   give   advantages   to   regulation 
of  employment,  can  only  be  regarded  as  mitiga- 
tions of  the  general  burden  which  the  Act  places 
upon    employment    as    such.      The    object    should 
rather  be  to  base  the  employer's  contribution,  not 
on  each  week's  employment  of  each  workman,  but 
on   his   presumable   contribution   to  the   total   cost 
of   unemployment    in    his    trade.      This    would    be 
measured  accurately,  not  by  the  number  of  persons 
employed    by   him    in    a   given    time,    but    by    the 
fluctuations   in   that   number.      Now,   whether   any 
method  of  assessment  can  be  devised  which  would 
approximate   to   a   fair   measure   of   these   fluctua- 
tions   is    a    question    for    the    fiscal    expert.      But 
failing  such  a  method,  which  would  give  the  em- 
ployer an  individual  interest  in  the  equalisation  of 
employment,  far  the  best  method  of  exacting  his 
contribution  would  be  to  make  it  a  direct  pro  rata 
charge   on   his   profits  ;    that   is   to   say,    the   total 
cost  of  unemployment  insurance  in  a  given  trade 
in  a  given  district  being  ascertained  over  a  term 
of  years,  a  moiety  would  be  charged  on  employers 
collectively  and  divided  among  them  in  proportion 
to  their  profits.     There  would  be  a  reassessment 
every  three  or  five  years,  so  that  the  charge  would 
vary  directly  with  the   amount  of  unemployment. 
So   placed,   the   charge   would  not   operate   as   an 
mducement  to  the  earlier  discharge  or  later  recall 


THE   CONTROL  OF  INDUSTRY        139 

of  workmen,  but  would  simply  supply  a  definite 
pecuniary  inducement  to  employers  to  act  collec- 
tively for  the  more  equable  regulation  of  trade  ; 
while  in  periods  of  depression  the  workman,  having 
his  benefit  to  fall  back  on,  would  not  cease  to 
be  a  purchaser  of  goods,  and  would  not  therefore 
involuntarily  assist  in  extending  the  area  of  stag- 
nation. In  such  a  form  of  public  supervision  it  is 
not  unreasonable  to  see  the  beginnings  of  a  radical 
cure   of   cyclical   unemployment,' 

There  is,  however,  one  side  of  the  Insurance 
scheme  which,  in  my  view,  deserves  more  praise 
than  it  has  received.  It  secures  to  the  sick  man 
certain  definite  benefits  as  a  matter  of  indefeasible 
right.  He  can  claim  medical  attendance,  sana- 
torium treatment,  and  a  weekly  income  of  definite 
amount.  He  is  taken  out  of  the  hands  of  com- 
mittees, inspectors,  and  relieving  officers,  and  is 
given  instead  a  legal  claim  which  he  can  enforce. 
This  is  the  true  break-up  of  the  Poor  Law,  the 
true  line  of  emancipation  for  the  great  majority 
—for  they  are,  after  all,  the  great  majority— who 
work  honestly  and  well  for  a  scanty  return.  To 
assure  them  a  certain  definite  provision,  small  as 
it  may  be,  as  their  own  is  to  treat  them  as  inde- 
pendent  citizens.      To    send   them   to    plead    their 

'  Seasonal  unemployment  is  a  different  problem  due  to  natural 
causes  and  can  be  best  met,  in  accordance  with  the  suggestions 
of   the   Minority  Report,  by  a  dovetailing  of   different  trades. 

The  proposals  of  that  Report  for  an  organisation  of  the  Labour 
market  by  such  arrangement  of  public  works  as  would  increase 
national  and  municipal  production  in  bad  seasons  and  relax 
it  in  good  seasons  is  a  palliative  which  has  some  obvious  disadvan- 
tages but  if  cautiously  employed  may  serve  a  useful  purpose. 
But  instead  of  striking  at  the  root  of  the  matter  it  accepts 
cyclical  fluctuations  as  inevitable.  To  this  view  it  may  be 
rejoined  that  if  these  fluctuations  are  not  curable  by  some  such 
mild  methods  of  public  supervision  as  are  suggested  in  the  text 
they  will  drive  the  nation  to  a  much  more  radical  form  of  the 
collective  organisation  of  industry. 


140  THE  LABOUR  MOVEMENT 

case  before  inspectors  or  committees,  be  these 
never  so  benevolent,  is  to  reduce  them  to 
dependence.  There  remain  for  oflicialdom  the 
rehef  of  exceptional  misfortune  and  the  discipline 
of  idleness.  But  the  true  cure  of  poverty  is  in 
the  establishment  of  a  defined  right  of  income  in 
times  of  helplessness,  charged  on  the  "  surplus  " 
fund  of  industry. 

So  much  may  suffice  to  illustrate  our  general 
principle,  and  farther  I  cannot  attempt  to  go  in 
this  connection.  It  will  be  well,  however,  in  con- 
elusion,  to  meet  one  or  two  theoretical  objections 
which  may  be  urged  against  the  general  principles 
of   the   collective  control   of   industry. 

It  may  be  said,  first,  that  economic  laws  render 
our  ideals  impossible.  This  objection  may  mean 
two  or  three  things.  It  may  mean  generally  that 
sound  economics  are  opposed  to  such  views.  If 
that  is  so,  we  must  of  course  have  the  particular 
discrepancies  pointed  out  before  we  can  reply  to 
them.  It  may  mean,  again,  that  economic  laws 
are  as  inevitable  as  those  of  arithmetic  or 
astronomy,  that  it  is  equally  hopeless  to  contend 
against  them  ;  that  these  laws  have  produced  the 
present  state  of  society,  and  that  the  said  state  of 
society  cannot  therefore  be  modified  by  human 
efi"ort.  Against  this  hypothetical  but  not  unlikely 
objection,  the  reply  simply  is  that  it  rests  on  a 
misconception  of  the  idea  of  law.  A  law  in 
economics,  as  in  any  other  science,  simply  states 
what  has  resulted,  and  is  expecte"d  to  result,  from 
certain  conditions— what  will  be  the  effect  of  a 
given  cause.  Political  economy  traces  the  existing 
state  of  industry,  distribution  of  wealth,  &c.,  to 
certain  causes,  and  says  that,  given  those  causes, 
the  effects  follow  inevitably.  Very  likely,  but  sup- 
pose   we    can    control    the    causes?      Given    free 


THE   CONTROL   OF  INDUSTRY        141 

competition,  enormous  inequalities  of  wealth  are 
inevitable.  Doubtless,  but  suppose  we  can  super- 
sede competition  by  an  intelligent  control  of 
industry?  We  cannot  argue  from  what  happens 
now  to  what  would  happen  under  changed  condi- 
tions. The  fields  of  economic  and  much  other 
scientific  thought  are  strewn  with  the  bones  of 
those  who  have  tried  to  reach  truth  by  this 
method,  and  have  perished  intellectually  in  the 
attempt . 

In  a  somewhat  similar  spirit,  it  is  sometimes 
said  that  political  economy  favours  free  competi- 
tion. This  idea  still  seems  to  work  confusedly  in 
the  inner  fogs  of  many  minds,  but  it  is  about  as 
intelligible  as  to  say  that  physiology  favours 
disease,  or  astronomy  the  motion  of  the  earth 
round  the  sun.  Political  economy  has  emerged  as 
a  science  at  a  period  when  free  industrial  enter- 
prise has  been  more  widely  extended  than  hereto- 
fore, and  accordingly  it  has  been  mainly  concerned 
to  examine  the  phenomena  that  arise  under  a  com- 
petitive regime.  But  political  economy  is  con- 
cerned purely  with  the  ascertainment  of  facts. 
It  tells  us,  or  tries  to  tell  us,  what  happens  under 
given  economic  conditions.  It  does  not  tell  us 
what  ought  to  happen,  what  would  be  most  desir- 
able in  the  general  interests.  It  does  not,  as  a 
pure  science,  favour  any  one  form  of  industrial 
organisation  rather  than  another.  And  if  any 
political  economist  does  show  such  favour,  we  can 
only  say,  that  qua  political  economist  he  has  no 
business  to  do  any  such  thing.  The  whole  notion 
implies  an  entire  misunderstanding  of  the  nature 
of  science  as  an  attempt  to  interpret  existing  facts 
as  it  finds  them.  The  ordinary  "  scientific  "  objec- 
tions to  coUectivist  reforms  are,  in  fact,  the 
objections   of  pseudo-science. 


142  THE  LABOUR  MOVEMENT 

There    is,    however^    one    specific    form    of    the 
econ,omic   objection   which   we   can   hardly   expect 
to  escape.     The  population  theory  has  been  erected 
into  a  bulwark  against  almost  all  theories  of  pro- 
gress since  the  days  of  Malthus,  and  it  is  hardly 
to  be  supposed  that  the  Labour  movement  of  to-day 
will  be  allowed  to  pass  unchallenged.     I  shall  be 
told  that  this   reckless  ministering  to   human   life 
and   comfort,    this   monstrous   preservation   of   the 
incompetent,  will  have  as  its  inevitable  result  the 
increase  of  population,  which  must  infallibly  lead 
to  increased  poverty.     Observe  the  reasoning  here. 
There  are  more  mouths  to  fill  ;    therefore  there  is 
less   for   each.      Quite   so,    if   the   whole    stock   of 
food  remains  the  same.     But  how  if  the  supply  of 
food  increases  as  fast  as  the  population,  or  faster? 
Is  not  this  possible,  since  each  new  consumer   is 
(or  is  to  be*)  also  a  new  producer?      No,  I   shall 
be  told  ;    the  law  of  Diminishing  Returns  prevents 
this.     Put  ten  men  to  labour  on  a  farm,  and  you 
get  a  certain  return.    Add  ten  more  next  year,  and 
you  get  a  larger  return,   but  not   twice   as   large. 
You  have  doubled  your  labour,  but  you  will  find 
the  produce  less  than  double.     And  this  gets  worse 
the  farther  we  go  on.     Ten  men,  say,  could  pro- 
duce enough  from  the  farm  to   live   in   comfort. 
Twenty   men   produce   enough   to   keep    fifteen    in 
comfort.      Then    five    will    be    underfed.      Thirty 
men's   labour   will   keep   eighteen   in   comfort   and 
twelve  will  be  in  rags  ;    and  so  it  goes  on,  getting 
worse    and    worse.      Now,    all    England    and    all 
England's  industry  may  be  looked  at  thus.     Ten 
million,   say,   could   live  comfortably   in   England. 
At   twenty  millions   five   will   be   submerged.      At 
thirty  twelve  will  be  in  want,   and  so   on. 

I  do  not  suppose  that  this  argument  would  now 
be  used  by  any  competent  economist.     But  it  may 


THE   CONTROL   OF  INDUSTRY        143 

be  well  to  explain  briefly  the  nature  of  the  mis- 
take. The  simple  truth  is  that  the  law  of 
Diminishing  Returns  is  a  misnomer.  At  one  stage 
returns  increase  proportionately  to  the  amount  of 
labour  applied — i.e.,  a  given  addition  of  labour 
brings  a  more  thaji  proportionate  increase  of  pro- 
duct. At  another  stage  returns  decrease  propor- 
tionately to  the  amount  of  labour — i.e.,  a  given 
addition  of  labour  brings  a  less  than  proportionate 
increase.  Thus  a  farmer  working  single-handed 
in  a  Western  State  reaps  a  certain  harvest.  If  he 
is  able  to  hire  one  labourer  his  return  is  more  than 
doubled.  A  second  labourer  adds  yet  more  than 
the  first,  and  so  on  up  to  a  certain  maximum,  after 
which  the  addition  of  a  fresh  labourer  makes  a 
smaller  addition  of  produce  than  is  obtained  from 
the  average  of  preceding  labourers.  At  this  point 
Increasing  Returns  give  way  to  Diminishing 
Returns.  And  so  it  is  in  all  industry.  There  is  a 
period  of  Increasing  and  a  period  of  Diminishing 
Returns,  and  even  an  interweaving  of  the  two, 
so  that  we  pass  from  one  to  the  other  and  back 
again.  And  thus  considered,  the  conception  must 
be  applied  to  manufacture,  mining,  transport,  and 
other  industries,  as  well  as  to  agricultural  land. 
If  it  be  granted — I  doubt  whether  any  human 
being  knows  it  to  be  true — that  English  agricul- 
ture is  now  permanently  in  the  period  of  Diminish- 
ing Returns,  it  must  be  remembered  that  England's 
population  does  not  depend  for  its  food  on 
England's  soil.  And  it  has  yet  to  be  shown  that 
an  increase  in  the  population  does  not  produce 
such  an  increasing  return  in  manufactures  and 
transport  as  more  than  counterbalances  the 
diminishing  return  from  agriculture.  That  this  has 
been  so  up  till  the  present  time  seems  to  be  agreed. 
Thus   Professor  Marshall  says  : — 


144  THE   LABOUR   MOVEMENT 

"  Political  arithmetic  may  be  said  to  have  begun 
in  England  in  the  seventeenth  century  ;  and  from 
that  time  onwards  we  find  a  constant  and  nearly 
steady  increase  in  the  amount  of  accumulated 
wealth  per  head  of  the  population."  ' 

RememlDering  the  enormous  increase  in  the 
population  which  has  taken  place  during  the  same 
time,  we  see  here  the  action  of  Increasing  Returns 
on  a  large  scale.  In  fact,  the  pressure  of  popula- 
tion on  subsistence  may  some  day  become  a  diffi- 
culty. But  that  it  in  any  way  contributes  to  our 
difficulties  at  present,  or  is  likely  to  do  so  within 
any  period  for  which  we  are  called  upon  to  make 
provision,  there  is  no  evidence  to  show.  What 
evidence  we  have  points  the  other  way.  And  for 
those  who  look  forward  with  anxiety  to  the  time 
when  even  standing-room  will  be  difficult  to  find 
on  this  earth,  let  us  in  platonic  fashion  crown 
them  with  garlands  as  the  wisest  and  most  far- 
seeing  of  men,  and  at  the  same  time  suggest  to 
them  that  they  would  find  a  more  congenial  society 
among  the  philosophers  of  Laputa  than  among  the 
legislators  of  our  city  .2 

A  somewhat  similar  objection  may  be  put  in 
simpler  form.  It  may  be  said  :  "  You  propose 
that  every  occupation  should  be  made  as  safe  and 
healthy  as  possible,  that  it  should  never  be  carried 

'  "Principles  of  Economics,"  vol.  i.,  p.  729,  2nd  edition,  1891. 

=  I  leave  the  above  passage  as  it  was  written  twenty  years 
ago,  because  it  is  instructive  to  see  how  quasi-scientific  arguments 
against  progress  change  with  times.  The  fall  of  the  birth  rate 
has  laid  the  ghost  of  over-population.  The  talk  now  is  all  of 
race  suicide  and  the  duties  of  parenthood,  and  the  blessings  of 
laro'e  families  are  being  assiduously  inculcated  by  celibates  and 
childless  married  people.  The  danger  of  race-suicide  to-day 
is  no  more  real  than  that  of  over-population  twenty  years  ago.  The 
standing  danger  is  that  people  may  be  beguiled  from  the  path 
of  rational  progress  by  whatever  happens  to  be  the  popular 
pseudo-science  of  the  hour. 


THE   CONTROL   OF   INDUSTRY        145 

to  the  point  of  exhaustion,  but  should  leave 
reasonable  leisure  for  every  worker,  and  yet  that 
every  man  should  have  enough  to  maintain  himself 
and  his  family  in  a  way  befitting  a  civilised  being, 
and  that  the  old  and  infirm  should  be  made  com- 
fortable. But  where  is  the  money  to  come  froni? 
Quite  apart  from  the  growth  of  population,  where, 
at  the  present  day,  is  the  wealth  that  will  meet 
this  enormous  charge?  " 

No  doubt  our  wages  bill  will  be  much  increased 
if  we  are  to  support  all  the  workers  of  the  nation 
at  the  price  of  moderate  toil.  But  it  is  not  at 
present  found  impossible  to  support  a  considerable 
number  of  people  in  a  great  deal  more  than  com- 
fort at  the  price  of  no  toil  whatever.  If  certain 
persons  hold  a  lien  on  the  produce  of  the  nation, 
and  exact  a  toll  for  which  they  make  no  adequate 
return,  our  difhculties  are  cer'tainly  increased  ;  but 
the  inference  is  not  that  we  should  abandon  our 
task,  but  that  we  should  reconsider  the  position 
of  these  persons.  Every  argument  from  the 
"  impossible  "  urged  by  the  possessors  of  "  sur- 
plus "  makes  the  case  against  the  private  appro- 
priation of  surplus  so  much  the  stronger.  The 
more  difificult  it  is  to  satisfy  the  primary  needs, 
the  more  necessary  it  becomes  to  apply  the  whole 
of  our  revenue  to  that  purpose.  And  the  first  need 
of  all  is  life  for  the  worker.  In  a  true  social 
state  every  citizen  counts  for  something — all  alike 
must  be  considered  ;  but  the  servants  of  society 
must  be  considered  first.  If  there  were  to  be  before 
and  after  at  all  in  a  true  State,  those  would  be 
before  who,  whether  with  brain  or  muscle,  are 
doing  the  hardest,  most  unpleasant,  most  dan- 
gerous, most  self-denying  work  for  the  common 
good  ;  and  next  to  the  worker  would  come  the 
helpless.     Not  till  these  first  needs  are  satisfied 

10 


U6  THE  LABOUR  MOVEMENT 

can  we  consider  any  other  claims.  But  is  there, 
in  point  of  fact,  any  ground  for  the  suggestion 
that  the  national  income  is  not  sufficient  to  meet 
the  demands  of  the  minimum  wage  and  yet  leave 
a  large  surplus?  If  we  look  again  at  the  figures 
of  Mr.  Rowntree  and  Professor  Bowley,  we  may 
make  a  very  rough  estimate  of  the  addition  to 
the  weekly  wages  bill  which  would  be  necessary 
to  raise  wages  generally  to  the  standard.  We 
shall  see  that  there  are,  in  round  numbers,  four 
millions  of  men  earning  between  15s.  and  30s. 
a  week.  Let  us  assume  that  the  deficiency  of 
their  wages,  as  compared  with  the  minimum  (which 
we  placed  between  20s.  and  25s.  for  the  rural 
districts,  and  25s.  and  30s.  for  urban  areas), 
averages  5s.  per  week.  This  would  give  a  total 
deficiency  of  £1,000,000  weekly.  Then  there  are 
320,000  receiving  less  than  15s.,  besides  casual 
workers,  making  perhaps  a  million  in  all.  Let  us 
suppose  that  for  this  million  the  deficiency  averages 
los.aweek.  This  gives  a  sum  of  £500,000  weekly. 
The  total  is,  in  round  figures,  £78,000,000  annu- 
ally. Let  us  assume  that,  with  similar  provision  for 
women  workers,  it  would  reach  100  millions.  The 
figure  will  suffice  to  indicate  the  order  of  magni- 
tude with  which  we  are  dealing.  Now,  let  us 
assume  further  that  this  increase  of  wages  makes 
no  addition  to  the  productive  power  of  labour,  but 
will  represent  a  net  deduction  from  surplus. 
What  is  the  measure  of  the  surplus?  Again,  we 
can  get  no  exact  or  even  approximate  figures,  but 
we  can  form  a  conception  of  the  order  of  magni- 
tude. Mr.  Chiozza  Money  has  given  reasons  for 
thinking  that  the  aggregate  income  of  those  above 
the  limit  of  abatement  of  income  tax — that  is,  above 
£700  a  year — is  £634,000,000  ;  and  this  is 
obtained  by  no  more  than  some  280,000  families, 


THE  CONTROL  OF  INDUSTRY        147 

whose  average  income  is  thus,  in  round  figures, 
£2,260.  We  may  take  less  than  half  of  this 
amount  for  "  surplus  "  in  the  sense  in  which  that 
term  is  used  here,  and  we  may  disregard  all  the 
elements  of  surplus  which  are,  of  course,  to  be 
found  in  smaller  incomes  as  well,  and  still  have  a 
sum  which  will  be  treble  that  required  to  make 
good  the  deficiency  of  wages.  If  that  is  so,  one- 
third  of  the  surplus  wealth  of  the  nation  would 
suffice  to  abolish  the  poverty  of  the  nation,  so  far 
as  that  poverty  is  due  to  maldistribution. 

I  conclude,  on  the  whole,  that  the  economic 
objections  to  the  collective  control  of  industry  are 
not  sound. 

But  one  question  remains  to  be  raised.  In  all 
this  advocacy  of  collective  control,  are  we  not 
leaving  one  side  of  life  out  of  account  altogether? 
Does  not  the  growth  of  the  central  authority  mili- 
tate fatally  against  the  liberty  of  individual 
citizens  which  is  essential  to  progress?  This  is 
a  consideration  which  would  have  had  more  weight 
in  England  twenty,  or  even  ten,  years  ago  than 
it  has  to-day  ;  and  I  deal  with  it,  not  so  much 
because  I  think  it  will  be  considered  as  because 
I  hold  that  it  ought  to  be  considered.  I  shall  not, 
therefore,  attempt  an  exhaustive  discussion  of  the 
arguments  for  individualism.  I  will  content  myself 
v/ith  one  or  two  as  representative,  and  will  then 
pass  to  the  more  positive  treatment  of  the 
subject . 

First,  then,  the  idea  of  the  "  rights  "  of  the 
individual  as  opposed  to  the  good  of  society, 
though  it  would  hardly  find  countenance  from  any 
competent  thinker,  still  appears  to  lurk  obscurely 
in  certain  minds,  from  which  it  emerges  from 
time  to  time  into  the  twilight  of  confused  platform 
speeches  or  magazine  articles.     We  still  hear  of 


148  THE   LABOUR  MOVEMENT 

the  rights  of  property,  the  right  to  free  labour,  the 
right  to  drink  when  and  where  you  please,  as 
though  these  rights  were  not  merely  the  creation 
of  society,  sustained  by  society  for  its  own  con- 
venience, and  having  no  other  moral  justification 
in  the  world,  but  superior  to  social  welfare  and 
competent  to  give  it  the  law.  But  a  "  natural 
right  "  independent  of  the  welfare  of  society  is 
as  much  a  contradiction  in  terms  as  a  legal  right 
independent  of  a  law  enforcing  it.  On  this  point 
philosophers  speak  with  one  voice.  That  it  is  the 
view  of  utilitarians,  like  Mill,  holding  as  they  do 
that  the  greatest  happiness  of  mankind  is  the  test 
of  right  and  wrong,  goes,  of  course,  without  saying. 
Let  us  hear,  then,  one  of  the  greatest  English 
representatives  of  a  quite  opposite  school  of 
thought  : — 

"  The  dissociation  of  innate  rights  from  innate 
duties  has  gone  along  with  the  delusion  that  such 
rights  existed  apart  from  society.  Men  were  sup- 
posed to  have  existed  in  a  state  of  nature  which 
was  not  a  state  of  society,  but  in  which  certain 
rights  attached  to  them  as  individuals,  and  then  to 
have  formed  societies  by  contract  or  covenant. 
Society  having  "been  formed,  certain  other  rights 
arose  through  positive  enactment  ;  iDut  none  of 
these,  it  was  held,  could  interfere  with  the  natural 
rights  which  belonged  to  men  antecedently  to  the 
social  contract  or  survived  it. 

"  Such  a  theory  can  only  be  stated  by  an 
application  to  an  imaginary  state  of  things,  prior 
to  the  formation  of  societies  as  regulated  by  custom 
or  law,  of  terms  that  have  no  meaning  except  in 
relation  to  such  societies.  '  Natural  right,'  as 
right  in  a  state  of  nature  which  is  not  a  state 
of  society,  is  a  contradiction.  There  can  be  no 
right  without  a  consciousness  of  common  interest 


THE   CONTROL   OF  INDUSTRY        119 

on  the  part  of  members  of  a  society.  Without  this 
there  tmight  be  certain  powers  on  the  part  of 
individuals,  but  no  recognition  of  these  powers 
by  others  as  powers  of  which  they  allow  the  exer- 
cise, nor  any  claim  to  such  recognition  ;  and  with- 
out this  recognition  or  claim  to  recognition  there 
can   be   no   right."  ^ 

On  this  point,  then.  Utilitarian  and  Transcen- 
dentalist  join  hands.  A  right  is  nothing  but  what 
the  good  of  society  makes  it.  If,  all  things  con- 
sidered, it  were  well  for  society  as  a  whole  to 
destroy  every  right  of  private  property  to-morrow, 
it  would  be  just  to  do  so,  and  the  owners  would 
have  no  right  to  object.  They  might  resist  with 
physical  force,  but  they  would  have  no  moral 
ground  to  stand  upon.  If,  therefore,  any  form 
of  property  or  any  liberty  no  longer  serves  a 
good  social  purpose,  it  ceases  to  be  morally  a 
right.  Even  the  compensation  due  to  individuals 
whose  rights  are  affected  by  such  changes  is 
assigned  to  them  in  the  name  of  the  common 
welfare. 

This  being  understood,  we  pass  to  the  scientific 
arguments  for  individualism.  The  chief  of  these 
arguments  is  an  application  to  human  progress  of 
ideas  derived  from  the  organic  world  at  large. 
The  struggle  for  existence  among  plants  and 
animals  is  continually  eliminating  the  majority  of 
those  which  are  born,  and  the  survivors  are  only 
able  to  maintain  their  ground  by  superiority  to 
the  remainder  in  strength,  swiftness,  cunning, 
endurance,  or  some  similar  quality.  Hence  the 
natural  result  of  the  struggle  is  the  survival  of 
the  fittest,  which  is  the  means  of  the  gradual 
evolution    of    higher    from    lower    forms.      So    in 

■  T.  H.  Green,   "Principles  of    Political  Obligation,"   Philo- 
sophical Works,  vol.  ii.,  p.  354,  2nd  ed.,  1890. 


150  THE   Lx\BOUR  MOVEMENT 

human  life  success  is  to  the  strong,  the  swift,  the 
cunning,  and  the  patient.  Let  natural  forces  play, 
and  these  shall  inherit  the  earth,  the  weak  and 
feeble  being  rooted  out.  In  this  way,  by  slow 
degrees,  we  attain  to  a  higher  type.  But  if  by 
artificial  means  we  preserve  the  impotent  and  the 
helpless,  we  hinder  this  beneficent  natural  pro- 
cess. We  prolong  the  misery  of  their  extinction 
and  lower  the  average  of  human  excellence. 
Happiness  and  perfection  are  reached  by  men  and 
by  other  organisms  when  they  are  thoroughly  well 
adapted  to  their  environment,  and  the  supreme  law 
of  progress  is  that  the  ill-adapted  being  should 
be  left  to  die  : — 

"  Thou  shall  not  kill,  but  ncedst  not  strive 
Officiously  to  keep  alive." 

Now,  we  fully  agree  with  the  evolutionists  in 
their  main  position.  It  is  desirable  that  the  fit 
should  succeed  and  the  unfit  fail  ;  we  are  ready 
even  to  exclude  the  utterly  unfit  from  society  alto- 
gether by  enclosing  them  in  prison  walls.  But 
who  are  the  unfit?  "Those  who  are  ill-adapted 
to  their  environment,"  say  the  evolutionists.  Quite 
so.  And  what  is  the  environment  of  man?  The 
society  of  other  men.  Then  who  is  the  fit  man? 
Clearly  the  man  who  is  best  adapted  for  social 
life.  And  who,  again,  is  he?  Is  he  the  bold, 
unscrupulous  man  of  force— the  exacting,  the 
merciless,  the  ungenerous?  Such  is  the  man  who 
succeeds  in  the  anarchical  struggle  for  existence. 
Or  is  he  the  merciful  and  generous  man  of  justice, 
whose  hardest  fights  are  fought  for  others'  lives, 
who  would  rather,  with  Plato,  suffer  wrong  than 
inflict  it,  and  who  would  lay  down  his  life  to  serve 
mankind?  The  first  is  fittest,  actually,  to  survive  in 
the  unregulated  contest  of  individuals.    The  second 


THE  CONTROL   OF   INDUSTRY        151 

is  fittest,  morally,  to  survive  in  a  society  of 
mutually  dependent  human  beings.  And  that  the 
morally  fittest  shall  actually  survive  and  prosper 
is   the   object   of  good   social    institutions.' 

This  society  of  the  just  may  be  an  unattain- 
able ideal  upon  earth  ;  it  may  be  destined  to  exist 
only  in  some  heavenly  place  among  the  gods.  But 
according  as  we  are  brave  or  faint-hearted,  wise 
or  foolish,  virtuous  or  corrupt,  we  approach  it  or 
fall  off  from  it.  There  is  not,  and  may  never  be, 
a  heaven  upon  earth,  but  that  is  no  reason  why 
we  should  not  strive  to  realise  as  much  of  heaven 
as  we  can.  We  can  approach,  if  we  can  never 
reach,  the  rule  of  Right  and  of  Justice— that  those 
shall  prosper  who  deserve  it.  We  can  at  least 
institute  and  maintain  conditions  which  favour  this 
result,  which  therefore  promote  the  survival  of  the 
fittest  in  the  only  sense  in  which  that  end  is 
desirable.  But  even  the  halt  and  the  lame,  if  they 
bear  their  trouble  bravely,  may  be  fitter  for  the 
social  state,  and  serve   it  better   by   their   patient 

'  It  is  almost  superfluous  to  point  out  the  ambiguity  in  the 
word  "  fit."  In  any  struggle  the  fittest  survives.  He  would  not 
have  survived  had  he  not  been  the  fittest  to  meet  the  particular 
conditions  of  that  particular  struggle.  It  does  not  follow  that 
he  is  the  fittest  from  a  moral  point  of  view — i.e.,  that  he  is  the 
competitor  for  whom  a  moral  man,  weighing  the  merits  of  the 
rivals  from  a  moral  point  of  view,  would  desire  the  victory. 
Very  immoral  qualities  may  be  the  condition  of  success  in  certain 
states  of  social  or  non-social  existence.  If,  then,  we  wish  to 
preserve  the  morally  fit,  we  must  make  submission  to  moral  laws 
the  main  condition  of  success.  Then  the  two  meanings  of  fitness 
coincide.  The  morally  fit  become  the  best  fitted  to  survive.  In 
principle  this  argument  is  now  generally  recognised  by  biolo- 
gists, who  in  relation  to  social  progress  substitute  the  conception 
of  a  deliberate  or  rational  selection  by  society  for  natural 
selection  as  the  method  of  securing  racial  progress.  The 
question  of  Eugenics,  however,  would  require  a  separate  volume. 
I  have  briefly  discussed  some  of  the  principles  involved  in 
"Social  Evolution  and  Political  Theory,"  Chap.  III. 


152  THE   LABOUR  MOVEMENT 

lives,  than  the  bold  arid  strong  who,  in  pursuit  of 
their  own  ends,  turn  the  earth  into  a  hell.  Better 
to  preserve  the  physically  weak  and  their  offspring 
than  the  morally  bad  and  their  brood  of  evil. 
Better  to  keep  alive  a  maimed  deformity  than  the 
human  monsters  who,  if  the  tale  be  true,  "  grow  " 
these  deformities  for  gain.  But  we  have  no 
such  sad  alternatives  before  us.  A  due  regula- 
tion of  economic  conditions  would  provide  for 
physical  as  for  moral  health,  and,  far  from  scorn- 
ing the  teachings  of  biology,  would  use  them  to 
promote  the  evolution  of  a  nobler  species.'  The 
evolutionist  argument  thus  correctly  understood 
makes   straight   for   collective  control. 

The  true  value  of  liberty  was,  I  venture  to 
think,  better  understood  by  older  writers,  like  J.  S. 
Mill.  That,  in  his  phrase,  "  individuality  is  an 
element  of  wellbeing  "  is,  I  believe,  a  permanent 
truth.  We  do  not  want  to  run  everybody  into  one 
mould.  We  do  not  wish  to  turn  our  national 
institutions  into  a  Procrustes  bed,  in  which  every 
man's  nature  is  to  be  cut  to  one  length.  But 
then,  we  entirely  deny  that  the  regulation  of  in- 
dustrial life  tends  in  this  direction.  If  it  were 
proposed  to  impose  a  uniform  religion,  to  dictate 
a  system  of  thought,  to  interfere  with  a  man's 
leisure,  even  to  regulate  his  minor  tastes  in  dress 
or  furniture,  then,  indeed,  we  should  be  cramping 
individuality  and  inaugurating  an  era  of  stagna- 
tion. And  when  such  things  are  advocated,  we^ 
for  our  part,  shall  be  found  among  the  ranks  of 
the  Individualists.     But  an  active  social  life  has  no 


'  So  much  has  been  said  by  evolutionists  of  the  danger  of 
keeping  alive  tendencies  injurious  to  society,  that  it  is 
surprising  that  they  should  not  notice  the  tendency  of  indi- 
vidualism to  foster  selfishness  and  callousness  to  suffering — the 
most  directly  antisocial  of  all  tendencies. 


THE   CONTROL  OF  INDUSTRY        153 

connection  with  the  rule  of  bigotry  and  intolerance. 
The  best  social  life  consists  precisely  in  the  har- 
monious working  out  to  their  fullest  possible 
development  of  the  best  capacities  of  all  members 
of  the  community.  And  true  liberty,  to  quote 
Professor  Green  again,  is  found  when  each  man 
has  the  greatest  possible  opportunity  for  making 
the  best  of  himself.  And  the  problem  for  society 
is,  so  far  as  possible,  to  ensure  such  liberty  for 
all  its  members.  To  do  this  undoubtedly  involves 
the  curtailment  of  individuals  in  some  of  their 
actions.  But  some  such  limitations  are  essential  to 
the  very  existence  of  society.  We  cannot  allow 
people  to  discharge  pistols  in  Piccadilly  or  bombs 
at  the  base  of  our  public  buildings,  however  much 
they  may  be  convinced  that  they  are  but  following 
their  best  impulses  in  so  doing.  We  have  to 
curtail  the  free  play  of  their  aspirations  for  the 
safety  of  ourselves  and  our  fellow-citizens.  The 
curtailment  of  the  liberties  of  some,  then,  may 
mean  tlie  maximum  of  liberty  upon  the  whole. 
And  this  maximum  it  is  our  object  to  ensure. 
Thus  free  competition  for  employment  is  a  form  of 
uncurtailed  liberty,  and  it  results  in  working  hours 
of  twelve,  fourteen,  or  sixteen  a  day,  with  full 
liberty  for  self -development  in  the  hours  that 
remain.  If  we  curtail  the  liberty  on  one  side,  and 
so  obtain  an  eight -hour  day  for  a  group  of  workers, 
with  four,  six,  or  eight  hours'  additional  leisure, 
do  we  add  to  liberty  or  subtract  from  it  upon 
the  whole?  If  we  compel  so  much  education  as 
puts  a  child  in  a  position  in  which  he  has  all  the 
best  thoughts  that  have  been  expressed  in  his 
mother -tongue  at  his  command,  do  we  give  him 
a  worse  or  a  better  chance  of  developing  his  nature 
in  the  long  run?  In  a  word,  if  we  exercise  control 
where    the    health    and    other    material    needs    of 


154  THE   LABOUR  MOVEMENT 

society  are  concerned,  do  we  augment  or  diminish 
the  power  of  satisfying  higher  needs?  I  should 
reply  that  all  depends  on  the  wisdom  of  our 
control.  If  you  govern  badly  or  unwisely,  prob- 
ably enough  you  will  get  bad  results.  But  it  is 
a  bad  government  indeed  that  would  not  be  better 
than  anarchy,  just  as  it  is  a  very  poor  brain  that 
is  no  better  to  its  possessor  than  an  empty  skull. 
The  actual  control  itself  is,  in  fact,  a  small 
obstacle  to  liberty  in  its  higher  aspect.  Just  as 
it  matters  little  to  control  the  body  if  you  leave 
the  spirit  free,  so  it  is  a  small  thing  to  order  man's 
doings  in  the  way  of  providing  material  needs  if 
you  leave  him  to  roam  unfettered  in  the  larger 
field  of  mental  and  spiritual  development.  And  as 
our  object  is  to  enable  men  to  realise  such  develop- 
ment, and  find  in  it  their  greatest  happiness,  we 
insist  at  one  and  the  same  time  on  perfect  freedom 
in  this  direction,  and  perfect  organisation  of  all 
the  material  basis  of  society  which  forms  the 
foundation  of  the  wider  life. 

We  do  not,  then,  attack  liberty,  but  defend  it. 
But  we  distinguish  kinds— or,  if  you  like,  spheres 
—of  liberty  as  of  very  different  importance.  And 
we  advocate  curtailment  of  the  lower  kinds  in  the 
interests  of  the  higher.  It  may  be  asked.  Who 
is  the  judge  of  higher  and  lower,  and  who  decides 
what  is  essential  to  the  interests  of  the  higher? 
Only  one  answer  can  be  given— the  majority  of 
the  citizens  ;  and  this  brings  us  to  the  second 
of  Mill's  pleas  for  liberty — the  fallibility  of  any 
human  authority.  Here,  again,  we  have  a  con- 
sideration of  great  and  permanent  importance.  No 
human  being,  and,  therefore,  no  collection  of 
human  beings,  can  be  perfectly  wise.  If  we  admit, 
with  Aristotle,  that  the  wisdom  of  a  body  of  meii 
in  their  collective  decisions  may  be  greater  than 


THE   CONTROL  OF  INDUSTRY        155 

the  average  wisdom  of  the  component  individuals, 
we  must  yet  allow  that  it  is  imperfect.  The  court 
of  appeal  to  the  people  is  the  highest  human  court, 
because  none  higher  and  none  safer  can  be  devised. 
But  the  voice  of  the  people  is  not  the  voice  of 
God.  And  a  whole  generation  may  follow  a  mis- 
taken idea  about  its  own  best  interests.  To  ignore 
this   is  the  mere  weakness   of  fanaticism. 

But  we  have  a  corrective  to  all  mistakes — the 
only  corrective  open  to  mankind — in  free  criticism. 
We  must  in  many  ways  control  action  ;  we  cannot 
control  thought  ;  we  should  not  control  speech. 
In  all  curtailment  of  freedom  let  this  field  be  left 
open,  and  the  main  danger  of  government — per- 
sistence in  a  wrong  course — is  avoided.  We  shall 
lose,  we  do  lose,  something  by  toleration  in  this 
form.  The  promulgation  of  error  is  pro  tanto 
harmful.  But  Mill  has  showni  that  the  open 
advocacy  of  error  is  far  less  prejudicial  to  the 
cause  of  truth  than  the  suppression  of  divergences 
of  opinion.  Free  discussion  is  the  best  corrective 
of  stagnation,  and  free  discussion  involves  some 
error.  And  there  is  a  suitable  point  at  which  the 
repression  of  erroneous  doctrines  should  begin — the 
point,  that  is,  where  they  issue  in  action  to  the  hurt 
of  society.  At  that  point  repress  them  if  you  please, 
but  still  leave  men  free  to  talk.  This  distinction 
is,  of  course,  recognised  in  law.  It  is  open  to  a 
man  to  advocate  Mormonism  in  England,  but  it 
is  not  open  to  him  to  be  a  bigamist.  In  most 
respects  the  law  already  holds  that  it  is  best  to 
let  men  talk  out  their  thoughts  and  to  meet  them 
by  reason  and  persuasion  rather  than  with  a  whiff 
of  grapeshot.  And  so  far  from  advocating  an 
extension  of  collective  control  in  this  direction,  we 
would  rather  see  a  clearer  line  of  demarcation 
drawn,   and  the   rule   of   free   discussion   made   as 


156  THE   LABOUR  MOVEMENT 

nearly  absolute  as  any  rule  can  be.'  Let  the  fresh 
air  of  criticism  move  over  the  face  of  the  v^aters 
and  keep  them  astir.  Then,  at  least,  we  shall 
avoid  stagnation.  It  is  difhcult  to  many  people 
to  combine  toleration  and  zeal— difficult,  but  neces- 
sary. Half  the  progressive  movements  of  the 
world  have  failed  in  the  long  run  through  this 
defect.  To  raise  men  one  step  on  the  upward 
path,  they  have  built  up  a  macliinery  which  has 
prevented  all  further  movement  ;  and  the  next 
stage  has  had  to  begin  with  the  breaking  down 
of  this  cumbersome  mechanism.  If  for  the  future 
this  error  can  be  avoided,  progressive  movements 
will  no  longer  contain  the  causes  of  stagnation  or 
relapse  within  themselves.  And  the  single  general 
principle  which  can  be  laid  down  to  help  us  here 
is  the  principle  of  free  thought  and  free  discussion. 
It  may  be  asked,  "If  you  admit  the  State  to  be 
fallible,  how  can  you  insist  that  we  should  let  it 
judge  for  us?  "  I  purposely  put  the  question  in 
this  form,  because  I  think  that,  however  phrased, 
it  rests  on  an  unanalysed  idea  of  the  State  as  some- 
thing outside  ourselves.  The  truth,  of  course,  is 
that  we  are  the  State,  and  when  we  judge  and 
decide  things  as  a  State,  we  are  in  no  worse 
position  for  judging  than  in  the  practical  affairs  of 
daily  life.  I  cannot  get  an  infallible  judgment 
from   any   source   on   earth,   whether   on   my   own 

'  Apart  from  obsolete  absurdities  like  the  Censorship  and  the 
Blasphemy  laws  indecency  on  the  one  hand  and  direct  incitement 
to  disorder  on  the  other  are  punishable.  In  the  latter  case  the 
line  between  speech  and  action  tends  to  disappear  and  it  is 
only  at  this  point  that  words  may  be  justly  held  criminal.  In 
the  former  case  it  is  not  the  appeal  to  opinion  that  ought  to  be 
punished  but  the  manner  of  expression  which  is  intended  not  to 
influence  opinion  but  to  excite  morbid  feeling.  It  must  be 
admitted,  however,  that  in  both  cases  the  line  is  difficult  to  draw 
and  any  restrictive  law — or  for  that  matter  any  moral  censorship 
exercised  by  opinion — may  be  readily  abused. 


THE   CONTROL   OF   INDUSTRY        157 

affairs  or  to  assist  anybody  else.  Even  if  it  is 
contended  that  every  one,  from  Solomon  to  the 
village  fool,  is  the  best  judge  of  his  own  interest, 
it  cannot  be  held  that  either  Solomon  or  the  fool 
is  infallible  even  on  this  point.  The  argument, 
then,  cuts  both  way's.  If  the  State  is  fallible  in 
dealing  with  the  individual,  the  individual  is  fallible 
in  acting  for  himself.  And  it  has  to  be  considered 
that  each  man's  action  affects  other  people,  and 
however  well  he  may  be  able  to  judge  for  them 
and  for  himself,  there  is  no  guarantee  that,  so 
far  as  they  are  concerned,  he  has  the  will  to  judge 
well.  The  democratic  State,  on  the  other  hand, 
represents  the  resultant  judgment,  so  to  say,  of 
the  conflicting  views  of  all  its  adult  and  sane 
members  ;  and  in  this  resultant  judgment  we  get 
the  nearest  approach  to  a  collective  judgment  of 
the  social  organism  upon  its  collective  interests, 
parallel  to  the  judgment  of  the  individual  man  on 
his  private  interests. 

There  are  those  who  allow  the  uncertainty  of 
things  to  weigh  so  heavily  upon  them  as  to 
paralyse  their  will  in  their  own  private  affairs. 
They  exaggerate  caution,  and  allow  the  one- 
thousandth  chance  of  failure  to  outweigh  the  999 
probabilities  of  success.  They  do  not  count  the 
cost  before  acting.  They  never  act  at  all.  The 
thing  in  some  instances,  I  believe,  becomes  a  kind 
of  mania,  ending  in  a  sort  of  general  paralysis. 
Many  people  suffer  from  a  similar  paralysis  when 
they  approach  public  affairs,  and  the  only  active 
principle  they  appear  to  retain  is  that  of  spread- 
mg  the  same  paralysis  throughout  society.  But 
society  must  judge  and  act,  as  individuals 
must  judge  and  act.  Inaction  no  more  saves 
us  from  responsibility  than  the  ostrich  secures 
itself  from  its  enemy  by  burying  its  head  in  the 


158  THE   LABOUR  MOVEMENT 

sand.  If  we  decline  to  act  we  are  responsible 
for  all  that  follows  from  inaction,  as  surely  as 
we  must  take  the  consequences  of  action  when  we 
do  act.  If  we  do  not  put  down  gambling,  if 
we  do  not  limit  the  hours  of  industry,  if  we  do 
not  punish  criminals,  we  must  be  held  respon- 
sible for  all  that  follows  from  our  passivity. 
Responsibility  is  hung  about  our  necks,  and  we 
cannot  shake  it  off.  For  better  or  for  worse,  in 
private  and  in  public,  at  each  emergency  of  life, 
on  each  new  question  forced  on  us,  we  have  to 
judge  as  best  we  can,  using  all  available  light, 
listening  to  every  instructed  teacher,  and  finally 
coming  to  a  decision  not  less  resolute  because 
delayed.  Consciousness  of  weakness  and  limita- 
tion is  all  good  if  it  leads  to  open-mindedness 
and  toleration,  all  bad  if  its  result  is  the  paralysis 
of  doubt.  And  in  the  great  matters  of  life  it  is 
our  imperative  duty,  not  only  to  hear  all  sides,  but 
also,  having  heard  them,  to  form  opinions  of  our 
own.  The  duty  of  having  convictions  is  correlative 
and  supplementary  to  the  duty  of  tolerance  and 
open-mindedness . 

Both  duties  may  be  recognised  in  our  public 
action,  and  the  due  balance  of  both  can  alone 
secure  a  continuous  forward  movement  of  mankind, 
and  in  it  lies  the  solution  of  the  old  question 
between  liberty  and  authority.  Using  every  avail- 
able means  of  obtaining  true  ideas  of  what  is 
necessary  as  the  fundamental  condition  of  social 
health,  it  is  our  right  and  duty  to  enforce  that 
by  any  and  every  form  of  collective  authority 
legally  or  voluntarily  constituted.  It  is  equally 
right  and  good  to  leave  a  fair  field  of  discussion 
open  to  all  who  consider  themselves  aggrieved, 
or  who  think  we  are  in  the  wrong  path.  And, 
finally,  collective  control  has  not  so  much  to  make 


THE  CONTROL   OF   INDUSTRY        159 

people  good  and  happy  as  to  establish  the  neces- 
sary conditions  of  goodness  and  happiness,  leaving 
it  to  individual  effort  and  voluntary  association 
to  develop  freely  and  spontaneously  all  the  fair 
flower  and  fruit  of  human  intercourse  and  know- 
ledge and  beauty  which  can  spring  from  a  sound 
root  firmly  planted  in  life-giving  earth. 


"Cbe  (Srcsbam  press, 

UXWIN  BROTHERS,  LIMITED, 
WOKING  AXD  LONDON. 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 

Los  Angeles 

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